RBI keeps inflation projection firm at 4.5% for FY25 amid uncertainty

Governor Das said, «Risks are evenly balanced,» as he unveiled CPI-based retail inflation projections indicating 4.9% in Q1 (April-June), 3.8% in Q2, 4.6% in Q3 and 4.5% in Q4. Charged with keeping inflation at 4% with a margin of 2% to either side, the RBI bases its monetary policy decisions largely on the CPI.

Headline CPI inflation moderated further during March-April, although it was offset by persistent pressures on food inflation, particularly pulses and vegetables, which remained in the double digits. Governor Das pointed to the rising trend in global food prices and double-digit growth in industrial metal prices, potentially worsening input cost conditions for firms.

Highlighting the seasonal concerns, Governor Das mentioned, «An exceptionally hot summer season and low reservoir levels may cause stress on the summer crop of vegetables and fruits.» He stressed the need to keep a close watch on arrivals of rabi pulses and vegetables.

While the forecast of an above-normal monsoon is encouraging for the kharif season, there is uncertainty over oil prices due to geopolitical tensions. Governor Das emphasized the Monetary Policy Committee’s vigilance against any inflationary risks, especially food inflation, which could derail the path of disinflation.

Governor Das reiterated the importance of maintaining the disinflationary stance of monetary policy to bring inflation permanently in line with the 4.0% target. He emphasized that sustainable price stability will lay the foundations for a period of strong economic growth.

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