Inflation likely to align with RBI's projection in Q1: Bank of Baroda report
Inflation is expected to remain in line with the Reserve Bank of India's (RBI) projections in the first quarter (Q1) of Financial Year FY26, driven by a favourable statistical base and continued deflation in essential commodities, according to the latest report by Bank of Baroda.Taking the influencing factors into consideration the RBI policy projects CPI inflation for the financial year 2025-26 at 3.7 per cent, with Q1 at 2.9 per cent; Q2 at 3.4 per cent; Q3 at 3.9 per cent; and Q4 at 4.4 per cent The BoB Essential Commodities Index (BoB ECI) remained in deflationary territory in June 2025, declining by -1.8 per cent year-on-year (YoY), compared to a -0.6 per cent drop in May 2025. This marks the third consecutive month of deflation, largely driven by sharp price corrections in vegetables and pulses, buoyed by improved production and favourable supply conditions."The outlook for inflation remains comforting for now, as it has the handholding of a favourable statistical base. This is likely to continue in Jul'25 as well. We expect to settle CPI to settle at 2.6 per cent in Jun'25," the report noted, suggesting the RBI will have some room to focus on growth-oriented measures in the near term.Vegetables under the TOP (Tomato, Onion, Potato) category led the deflation trend. Retail prices for onions and potatoes dropped significantly by -26.1 per cent and -20.3 per cent respectively in June, while tomatoes fell at a slightly slower pace of -24 per cent. Among pulses, Tur/Arhar recorded the steepest annual decline of -23.8 per cent, marking the fourth consecutive month of double-digit deflation. Other pulses such as Urad, Masoor, and Moong also showed consistent downward trends, supported by improved sowing in the ongoing Kharif season.
Cereals, particularly rice, also saw retail prices soften, falling by -5.1 per cent in June. Prices of miscellaneous items like salt and jaggery remained largely stable, while edible oils continued to remain elevated, albeit supported by favourable international pricing trends.On a month-on-month (MoM) basis, the BoB report noted a modest uptick of 0.6 per cent in June. However, the seasonally adjusted MoM figure actually declined by -0.7 per cent, indicating that much of the sequential rise was seasonal in nature.Tomato prices rose by a sharp 36.1 per cent in June compared to May, marking the highest monthly gain since October 2024 -- a result of early monsoon impact and typical seasonal price shifts. Although onion prices remained relatively stable, they witnessed a much softer sequential decline of -0.4 per cent compared to -9.8 per cent in May.
The report cautioned that June and July typically mark the seasonal reversal in TOP prices, with an upward correction in prices expected. It emphasised the need for better supply chain infrastructure, including cold storage and more localised vegetable clusters, to help moderate price volatility going forward. With inflation well below the RBI's upper tolerance band and supply-side pressures largely under control, the central bank appears to have a temporary breather, allowing it to stay focused on stimulating growth in the months ahead, the report added.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
an hour ago
- Mint
India-US trade deal: Industries prepared for trade talks outcome, national interest in focus; says CII President
India-US trade deal: The Confederation of Indian Industry (CII) President Rajiv Memani emphasised that the Indian industries are prepared for any outcome which is proposed after the bilateral trade talks between the United States and India, reported the news agency ANI on Sunday, 6 July 2025. Memani also said that industries will not pursue deals that are likely to compromise the national interest. The Indian government consulted industry stakeholders before entering trade negotiations with the United States. 'The Indian government has given considerable time to understand industry concerns, issues and opportunities. Every industry, every size of industry has been consulted to understand how India should be positioned,' said the CII President, cited in the agency report. The executive also shared that India is not compelled to conclude the trade deal with the US at any cost until the deal is in the interest of both nations. 'There is no doubt that India will only do this deal when it is in India's interest and America's interest. Until it is not in the interest of both countries, this deal will not happen. There is no compulsion in this regard,' Memani told the news agency. The CII President also pointed out that Indian industries will only support the Free Trade Agreement (FTA) if it offers them favourable terms compared to those of the other countries affected by the Trump tariffs. 'The 26% tariff that has been imposed will come down, and industry will get opportunities to operate there. We will remain more competitive compared to other countries,' said Memani, according to the agency report. Acknowledging that certain sectors like automotive will face difficulties if the trade deal doesn't provide a suitable outcome, Rajiv Memani highlighted that automakers in Mexico would be the primary beneficiary with the nation's tariffs at a near 0% level, making them the 'most competitive.' 'The maximum alternative replacement will come from Mexico, with some possibility from Vietnam,' he said, according to the agency report. Vietnam has a 20% tariff deal with the US, making it 'slightly less competitive' than Mexico compared to India's 26% tariff. The CII chief's assessment cited in the report suggests that the existing trade relationships can harm India's competitiveness. 'Many American companies may also invest in India to export from India. Indian companies will also have to focus on their competitiveness,' he told the news agency, suggesting that the government may need to implement reforms and support measures to help the domestic industries become more competitive in nature. CII President Rajiv Memani also highlighted that India needs an average nominal GDP growth rate of 10% annually to achieve the Viksit Bharat target by 2047, reported the news agency PTI on Sunday. 'India would require an average about 10 per cent nominal growth to achieve the Viksit Bharat vision,' Memani told the news agency. The nominal GDP of a nation is the total value of goods and services produced in the nation, determined by measuring the current market prices. This nominal GDP data is without adjusting the values for inflation, unlike real GDP data. Memani was appointed as the President of the Confederation of Indian Industries (CII) on 1 June 2025. He expects both the nation to finalise the trade pact shortly and remove the uncertainties looming over the market due to the negotiations.
Hans India
an hour ago
- Hans India
India's economy has tripled in size over last decade
India's growth story continues to draw global attention, backed by strong fundamentals and consistent performance. Over the past decade, India's economic size has tripled from Rs 106.57 lakh crore in to Rs 331.03 lakh crore in 2024–25, with the GDP growth at a robust 6.5 per cent for the year, according to official figures released on Sunday. The Reserve Bank of India expects this pace to continue into 2025–26. Other projections echo this optimism, with the United Nations forecasting growth of 6.3 per cent this year and 6.4 per cent next year, while the Confederation of Indian Industry places its estimate slightly higher at 6.4 to 6.7 per cent. This sustained performance is being driven by strong domestic demand. Rural consumption has picked up, city spending is rising, and private investment is on the upswing. Businesses are expanding capacity, with many operating near their maximum output levels. At the same time, public investment remains high, especially in infrastructure, while stable borrowing conditions are helping firms and consumers make forward-looking decisions, the statement said. Global conditions, by contrast, remain fragile. The United Nations has described the world economy as being in a "precarious moment", citing trade tensions, policy uncertainties, and declining cross-border investments. Amid this, India continues to stand out as a bright spot, with global institutions and industry bodies expressing confidence in its growth prospects. As part of India's strong macroeconomic fundamentals, inflation in the country has eased sharply, offering relief to both households and businesses. In May 2025, the year-on-year inflation rate based on the Consumer Price Index (CPI) stood at 2.82 per cent. This marks the lowest level since February 2019. It also reflects a drop of 34 basis points from the previous month. Food prices, which often have a big impact on overall inflation, have also cooled. The Consumer Food Price Index (CFPI) recorded an inflation rate of just 0.99 per cent in May 2025. This is the lowest food inflation seen since October 2021. Rural and urban food inflation were almost identical, at 0.95 per cent and 0.96 per cent, respectively. Compared to April 2025, food inflation declined by 79 basis points, showing a clear downward trend in essential items like vegetables and grains. Overall, the Reserve Bank believes that inflation will stay aligned with its medium-term target of 4 per cent. In fact, it may even fall slightly below that level in the coming months. India's capital markets are booming, and the confidence is visible. They have become a powerful engine for economic growth by turning household savings into investments. Despite global tensions and domestic uncertainties, the stock market maintained strong performance by December 2024. It outperformed many other emerging economies, showing how investors, both local and global, trust India's growth story, the statement added.
Time of India
an hour ago
- Time of India
Growth target for developed India: Viksit Bharat target needs 10% nominal GDP growth, says CII president Rajiv Memani; US trade pact to aid tech, exports
India needs to clock an average nominal GDP growth of 10% annually to achieve the government's goal of becoming a developed nation under the Viksit Bharat vision by 2047, newly-appointed CII president Rajiv Memani has said. Nominal GDP is the total value of goods and services produced in an economy measured at current market prices, without adjusting for inflation. "India would require an average about 10 per cent nominal growth to achieve the Viksit Bharat vision," Memani told PTI in an interview. Memani also said that the long-awaited interim trade pact between India and the US, which is expected to be finalised soon, would clear uncertainty in bilateral ties and open up larger markets for Indian companies, especially in labour-intensive sectors. "So I think first is that the uncertainty which was there, I think that will go away. People will get a clearer direction of what will happen in the future, and I think that has a very positive impact," he said. According to Memani, the agreement is expected to trigger more technology transfers, joint ventures and partnerships between Indian and American businesses. On the economic outlook, CII expects India to grow between 6.4% and 6.7% in the current financial year, backed by strong domestic demand. However, geopolitical volatility continues to pose a downside risk. 'We have a very good position macro economically, things are very stable. Our institutions, whether it's the capital markets, whether it is RBI, whether it is banks, are in good shape, corporate balance sheets are looking stronger,' he said. The Reserve Bank of India has retained its GDP growth forecast for FY26 at 6.5%, the same as the growth recorded in FY25, noting that the economy continues to show strength, stability, and opportunity despite global uncertainties. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
