A Reuters poll of 40 economists conducted April 3-8 estimated inflation in March was about 3.60%, indicating little change from last month.
Title inflation is not only maintained within the Reserve Bank of India’s tolerance zone 2-6%, but also below the ideal 4% inflation target.
RBI Outlook: Look forward?
RBI Governor Sanjay Malhotra said in announcing the decision of the Monetary Policy Committee on Wednesday that inflation has been on a downward trend and has been supported by a favorable outlook for food prices.
He noted that inflation is expected to ease further in fiscal 26, which has the potential to alleviate households coping with cost pressure. However, the central bank warned that it remains vigilant against global uncertainty.
U.S. President Donald Trump sold tariffs from multiple countries while implementing his “reciprocal” tariff plan on April 2. Although the president has since stopped higher interest rates 90 days after April 9, the base rate of 10% remains with a separate 25% automatic tariff.
“While expectation of food prices drops more significantly than expected in terms of inflation, we remain vigilant against the risks of global uncertainty and weather disruptions,” Malhotra added.
Despite global uncertainty, including those triggered by U.S. tariffs, MPC retained its inflation forecast for fiscal 2025-26, accounting for 4%, a slight decrease from the 4.2% forecast at its February meeting.
For fiscal 26, the Reserve Bank of India expects inflation to be 3.6% in the first quarter, 3.9% in the second quarter, 3.8% in the third quarter and 4.4% in the last quarter, with a uniform balance of risks.
