CPI inflation may remain at 2.2% in FY26, below RBI's forecast of 2.6%: SBI Research

Core Insights - India's Consumer Price Index (CPI) inflation for FY26 is projected at 2.2%, lower than the Reserve Bank of India's (RBI) forecast of 2.6% [1][2] - CPI inflation reached a 99-month low of 1.54% in September 2025, primarily due to a decline in food and beverage prices [2][3] - The decline in inflation since October 2024 has been largely driven by the food group, which shifted from a positive to a negative contribution [3] Inflation Trends - Core CPI, excluding gold, is currently at 3.28% [4] - Long-term inflation data appears to diverge from the RBI's forecasts, suggesting a need for the RBI to consider rate cuts rather than remaining overly cautious [5] - Inflation is expected to drop to around 0.45% next month, supporting the case for decisive policy action [6] Future Projections - Inflation for FY27 is projected to remain lower at 3.7%, indicating ongoing stability in price levels [6]