Daijiworld Media Network - New Delhi

New Delhi, Jul 15: India’s retail inflation is projected to hit a historic low in July 2025, with the average inflation for the financial year 2025–26 expected to remain well below the Reserve Bank of India’s (RBI) projections, according to a report by the State Bank of India (SBI).

“We believe that the upcoming July 2025 CPI inflation data is set to breach the lowest ever historical print,” the SBI report stated.

The bank forecasts average Consumer Price Index (CPI) inflation for FY26 to be between 3.0% and 3.2%, a significant dip compared to the RBI's estimate of 3.7% and far below the 4.6% average in FY25.

This decline comes on the back of a 50 basis points rate cut by the RBI in its June policy. The central bank is now placing greater focus on capital formation to fuel sustained and durable growth, the report added.

The Monetary Policy Committee (MPC) reaffirmed its data-driven approach, aiming to strike a careful balance between inflation control and economic expansion.

SBI hinted that another 25 basis points rate cut may be on the horizon “sooner than later,” describing it as an “adrenaline boost” needed to drive India’s economic momentum amid global uncertainties.

India’s June 2025 CPI inflation dropped to a 77-month low of 2.10%, down from 2.82% in May and 5.08% in June 2024. This sharp drop was largely due to falling food prices, particularly in vegetables, pulses, and spices, which pushed food inflation into negative territory at -0.20% — also a 77-month low.

Despite the overall cooling inflation, SBI raised a red flag on imported inflation, which has now risen for 13 consecutive months, driven primarily by high gold and silver prices. The share of imported inflation in India’s CPI basket soared to 71% in June 2025, up from 50% in May.

As inflation cools domestically but pressures build externally, the report reflects optimism with caution — marking a pivotal moment in India’s monetary landscape as the RBI charts its course ahead.