Inflation rates according to Acuité Ratings may potentially dip beneath 3.0% by December 2025.
The Reserve Bank of India (RBI) has projected India's Consumer Price Index (CPI) inflation for the fiscal year 2025-26 to average at 3.1%, with a few exceptions. According to the RBI's forecasts, inflation is expected to remain subdued for most of the fiscal year but will rise above 4% in the last quarter (Q4 FY26).
In a notable development, food inflation in July 2025 fell into the negative zone at -1.76%. This decline of 75 basis points compared to June 2025 marked the lowest level of food inflation since January 2019. The prices of essential commodities such as tomatoes, onions, and potatoes significantly decreased by -34.2%, -34.9%, and -34.3% respectively in July 2025.
Despite the dip in food prices, India's CPI inflation is projected to be below 3.0% until December 2025, according to Acuité Ratings and Research Limited. However, the RBI forecasts an increase in inflation above 4% in Q4 FY26, reaching around 4.4%.
Regarding the period from Q4 2025-26 to December 2025, the indicated trend is an inflation increase above 4%, according to RBI’s forecasts. Barring any major negative shock to input prices, core inflation is likely to remain moderately above 4% during the year, as per the RBI.
Sectors like education, health, and transport and communication indicate ongoing core inflation pressures with rates of 4.0%, 4.6%, and 2.1% respectively in July 2025. On the contrary, non-food items such as coconut oil, gold, and silver experienced steep price increases in July 2025. Coconut oil, gold, and silver prices surged by +131.8%, +36%, and +21.9% respectively.
The steady progress of the monsoon and robust kharif sowing are expected to keep food prices in check, according to the RBI. The RBI Governor, Sanjay Malhotra, noted that inflation is expected to remain subdued for most of FY26 but will rise above 4% in the last quarter.
In conclusion, the forecast signals a benign inflationary environment for much of FY26, followed by an expected rise above the RBI target in the last quarter, partly driven by core inflation and gold price increases.
Summary Table of RBI CPI Inflation Forecasts for 2025-26:
| Period | CPI Inflation Forecast (%) | |-------------------|----------------------------| | Q2 2025-26 | 2.1 | | Q3 2025-26 | 3.1 | | Q4 2025-26/Dec 25 | 4.4 (above 4% target) | | Full FY 2025-26 | 3.1 |
- In light of the RBI's projections for India's CPI inflation, individuals focused on personal-finance might consider investing in areas that are less susceptible to core inflation pressure, such as education-and-self-development and career-development opportunities.
- As the economy moves towards Q4 of the fiscal year 2025-26, businesses may like to tug their financial strategies to cope with the likely increase in inflation, especially in sectors like food and health.
- Being aware of the expected rise in inflation above the RBI's target of 4% in Q4 FY26, individuals might want to explore diverse investment portfolios including assets like gold, while also focusing on effective career-development and education-and-self-improvement to secure future finances.
