<p>Mumbai: The Reserve Bank on Friday significantly lowered the inflation projection for the current fiscal to 2 per cent from 2.6 per cent estimated earlier as the economy continues to witness rapid disinflation.</p><p>For the first time since the adoption of Flexible Inflation Targeting (FIT) in 2016, average headline inflation for a quarter at 1.7 per cent in Q2 of 2025-26, breached the lower tolerance threshold (2 per cent) of the inflation target (4 per cent).</p><p>It dipped further to a mere 0.3 per cent in October 2025, an all-time low.</p><p>"The faster than anticipated decline in inflation was led by correction in food prices, contrary to the usual trend witnessed during the months of September-October. Core inflation (CPI headline excluding food and fuel) remained largely contained in September-October, despite continued price pressures exerted by precious metals," RBI Governor Sanjay Malhotra said.</p><p>He was announcing the decision of the Monetary Policy Committee.</p><p>Excluding gold, core inflation moderated to 2.6 per cent in October.</p>.Rupee rises 20 paise to 89.69 against US dollar ahead of RBI's monetary policy decision.<p>Overall, the decline in inflation has become more generalised, the governor said.</p><p>On the inflation outlook, Malhotra said food supply prospects have improved on the back of higher kharif production, healthy rabi sowing, adequate reservoir levels and conducive soil moisture.</p><p>Barring some metals, international commodity prices are likely to moderate going forward, he added.</p><p>"Overall, inflation is likely to be softer than what was projected in October, mainly on account of the fall in food prices," he said.</p><p>Considering all these factors, Malhotra said retail (CPI) inflation for 2025-26 is now projected at 2 per cent with Q3 at 0.6 per cent; and Q4 at 2.9 per cent.</p><p>CPI-based retail inflation for Q1 of 2026-27 and Q2 are projected at 3.9 per cent and 4.0 per cent, respectively, he said.</p><p>The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 bps, Malhotra said, and added the risks are evenly balanced.</p>
<p>Mumbai: The Reserve Bank on Friday significantly lowered the inflation projection for the current fiscal to 2 per cent from 2.6 per cent estimated earlier as the economy continues to witness rapid disinflation.</p><p>For the first time since the adoption of Flexible Inflation Targeting (FIT) in 2016, average headline inflation for a quarter at 1.7 per cent in Q2 of 2025-26, breached the lower tolerance threshold (2 per cent) of the inflation target (4 per cent).</p><p>It dipped further to a mere 0.3 per cent in October 2025, an all-time low.</p><p>"The faster than anticipated decline in inflation was led by correction in food prices, contrary to the usual trend witnessed during the months of September-October. Core inflation (CPI headline excluding food and fuel) remained largely contained in September-October, despite continued price pressures exerted by precious metals," RBI Governor Sanjay Malhotra said.</p><p>He was announcing the decision of the Monetary Policy Committee.</p><p>Excluding gold, core inflation moderated to 2.6 per cent in October.</p>.Rupee rises 20 paise to 89.69 against US dollar ahead of RBI's monetary policy decision.<p>Overall, the decline in inflation has become more generalised, the governor said.</p><p>On the inflation outlook, Malhotra said food supply prospects have improved on the back of higher kharif production, healthy rabi sowing, adequate reservoir levels and conducive soil moisture.</p><p>Barring some metals, international commodity prices are likely to moderate going forward, he added.</p><p>"Overall, inflation is likely to be softer than what was projected in October, mainly on account of the fall in food prices," he said.</p><p>Considering all these factors, Malhotra said retail (CPI) inflation for 2025-26 is now projected at 2 per cent with Q3 at 0.6 per cent; and Q4 at 2.9 per cent.</p><p>CPI-based retail inflation for Q1 of 2026-27 and Q2 are projected at 3.9 per cent and 4.0 per cent, respectively, he said.</p><p>The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 bps, Malhotra said, and added the risks are evenly balanced.</p>