RBI Optimistic on Meeting Inflation Target Amid Global Shifts
The Reserve Bank of India is confident in hitting a 4% inflation target as food prices drop and economic conditions improve. The central bank's recent report highlights past reductions and notes the need for vigilance due to global economic uncertainties. Prospects for 2025-26 remain promising amid easing global commodity pressures.
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- India
The Reserve Bank of India (RBI) has reported optimism in achieving its 4% inflation target over the next year, driven by a reduction in food prices and favorable economic conditions. This assurance comes after inflation levels dipped below the target in early 2025, according to the central bank's Annual Report released Thursday.
The report highlights that headline inflation, covering all goods and services prices, including volatile items like food and fuel, showed a positive trend. Inflation hovered at an average of 4.6% during 2024-25, a decrease from 5.4% in the previous year, largely due to a fall in core inflation to 3.5% and deflation in fuel prices by 2.5%.
Prospects for 2025-26 appear promising with global commodity prices easing and improved agricultural outputs expected from a strong monsoon. However, the RBI warns of persistent risks, including service inflation, potential financial volatility, geopolitical strains, trade issues, and climate-related shocks that might threaten growth and price stability.
(With inputs from agencies.)
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