RBI Governor revises inflation outlook downward to 2% for FY26, reducing 0.6%

Mumbai: The Reserve Bank of India (RBI) on Friday revised the inflation outlook for the current financial year, FY26, projecting CPI inflation at 2 per cent, marking a reduction of 0.6 per cent from its earlier projection.The revision was announced by the RBI Governor Sanjay Malhotra while presenting the monetary policy on Friday. He stated that CPI inflation for this year is now projected at 2 per cent, again about 0.6 per cent downwards from the earlier outlook. He stated, "Inflation is likely to be softer than what was projected in October, mainly on account of the fall in food prices. Considering all these factors, CPI inflation for this year is now projected at 2 per cent, again about 0.6 per cent downwards from our earlier outlook". Headline CPI inflation declined to an all-time low in October 2025. The Governor noted that the faster-than-anticipated decline in inflation was led by a correction in food prices, contrary to the usual trend witnessed during the months of September and October.

Malhotra also shared that the Core CPI inflation remained largely contained in September-October, despite continued price pressures exerted by precious metals. He stated, "Turning to the inflation outlook, food supply prospects have improved on the back of higher kharif production, healthy rabi sowing, adequate reservoir levels, and conducive soil moisture. Barring some metals, international commodity prices are likely to moderate going forward". Considering all these factors, CPI inflation for this year is now projected at 2 per cent, again about 0.6 per cent downwards from the earlier outlook. The Governor also added that the underlying inflation pressures are even lower, as the impact of increase in prices of precious metals is about 50 basis points. The RBI also revised the GDP projections for the current financial year. Making the announcement, the RBI Governor stated that the Indian economy is projected to grow at 7.3 per cent in the current fiscal 2025-26, about a half percentage point higher than the previous estimate.