India's inflation may stay below 4% in first half of FY26: SBI Report

ANI April 7, 2025 143 views

The State Bank of India's latest economic report reveals a potentially groundbreaking inflation trend for the country. For the first time in recent years, inflation might remain below 4% for two consecutive quarters in fiscal year 2026. The report highlights global trade dynamics, particularly US tariff policies, as potential factors influencing India's economic landscape. With core inflation expected to stay between 3.9-4.0%, the forecast suggests a positive economic outlook for India in the coming fiscal year.

"US has imposed reciprocal tariffs to many economies that is more than India's" - SBI Report
New Delhi, April 7: The inflation in India may remain below 4 per cent in the first half of the financial year 2025-26 (FY26), said a report by State Bank of India (SBI).

Key Points

1

SBI forecasts inflation below 4% in first two quarters of FY26

2

Current account expected to turn surplus in Q4 FY25

3

Global trade dynamics might further reduce inflation rates

This could be the first time inflation stays below 4 per cent for two quarters in a row in recent years.

The report said, "US has imposed reciprocal tariffs to many economies that is more than India's....This will increase the fear of dumping into India by these countries, resulting in lower inflation."

It noted that the consumer price index (CPI) inflation is expected to fall to 3.8 per cent in the fourth quarter of FY25. For the full year FY25, average inflation may be around 4.6 per cent.

Based on this trend, SBI expects inflation to come down to 3.9-4.0 per cent in FY26. Core inflation, which excludes food and fuel prices, is likely to stay in the range of 4.2-4.3 per cent.

The report also said that headline inflation will continue to move downwards till September or October 2025. After that, there is a possibility it may rise again.

It also pointed out a global factor that could impact India's inflation. The United States has imposed reciprocal tariffs on several countries. These tariffs are higher than the ones India has placed.

As a result, there is a fear that other countries may start dumping their goods in India at cheaper prices. This could lead to a further drop in inflation levels in the country.

The report also gave an update on India's current account balance. Based on the latest trade and services data, it expects India's current account to be in surplus in the fourth quarter of FY25.

India's current account deficit (CAD) stood at USD 11.5 billion in the third quarter of FY25. This was 1.1 per cent of the country's GDP. It was slightly higher than the CAD of USD 10.4 billion (also 1.1 per cent of GDP) in the same quarter last year, but lower than the deficit of USD 16.7 billion (1.8 per cent of GDP) seen in the second quarter of FY25.

The merchandise trade deficit increased to USD 79.2 billion in the third quarter of FY25 from USD 71.6 billion in the same period of the previous year. However, net services receipts rose to USD 51.2 billion from USD 45.0 billion a year ago, helping to improve the overall current account situation.

Reader Comments

R
Rahul K.
This is great news for consumers! Lower inflation means our money will go further. Hope the prediction holds true 🙏
P
Priya M.
Interesting analysis but I'm concerned about the dumping angle. Cheaper imports might hurt local manufacturers even if it helps inflation numbers.
A
Amit S.
Finally some good economic news! 🎉 With elections coming up, this timing couldn't be better for the government.
S
Sunita R.
The report seems optimistic but I'll believe it when I see it at the grocery store. Food prices have been so volatile lately!
V
Vikram P.
While lower inflation is welcome, I hope RBI doesn't cut rates too aggressively. We need to maintain some buffer for future shocks.
N
Neha T.
The current account surplus prediction is the real story here! Shows our economy is becoming more balanced 💪

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
India Inflation SBI Report Economic Forecast Current Account Monetary Policy
You May Like!