Retail Inflation in India Set to Reach Historic Low

According to a groundbreaking report by the State Bank of India (SBI), retail inflation in India is on track to touch a record low in July 2025. This development comes as the average inflation for the financial year 2025–26 is expected to significantly undershoot the Reserve Bank of India's (RBI) projection.

"We believe that the upcoming July 2025 CPI inflation data is set to breach the lowest ever historical print," the report highlighted, suggesting a pivotal moment in India's economic landscape.

RBI's Rate Cut and Future Projections

The SBI estimates the average Consumer Price Index (CPI) inflation for FY26 to range between 3.0% and 3.2%, markedly lower than the RBI’s forecast of 3.7%. This follows the RBI’s recent decision to cut rates by 50 basis points in June, signaling a shift towards fostering capital formation for sustained growth.

Challenges and Opportunities Ahead

While the inflation trend appears benign, the report cautions against potential risks from external trade disruptions and volatile price movements. Notably, imported inflation has been on the rise, with gold and silver prices contributing significantly to a 71% share in the overall CPI basket in June.

The possibility of another 25 basis points rate cut was also hinted at, aiming to further stimulate economic growth amidst global uncertainties.