Highlights

• RBI projects inflation to stay below 4% until the second quarter next year.
• Full-year inflation forecast revised down to 2.0% from the earlier 2.6%.
• Core inflation likely steady at 4.39% in November, similar to October levels.
• Wholesale price index expected to contract again after October’s decline.

India’s inflation outlook has shifted further towards moderation, with the Reserve Bank of India indicating that price pressures are likely to stay below the 4% mark at least until the second quarter of the coming year. The central bank’s updated assessment suggests a softer inflation trajectory than earlier anticipated, adding new context to the broader debate on domestic price stability.

In its latest projections, the RBI expects headline inflation for the current financial year to average 2.0%. This is a notable downgrade from the previous estimate of 2.6% and falls below the 2.2% median forecast from a Reuters poll conducted last month. The revised projection reflects easing price trends across several categories, even as food-related volatility remains a recurring risk.

Core inflation — which omits the more erratic food and fuel components and is often considered a clearer gauge of underlying demand — is estimated to have stayed near 4.39% in November. This marks little change from October, indicating that structural price pressures may be stabilising after several months of gradual easing. India’s statistics office does not publish official core inflation figures, leaving market participants to rely on independent and survey-based estimates.

The wholesale price index (WPI), another key indicator used to track pricing trends at the producer level, is projected to have declined 0.60% year-on-year in November. This would follow the 1.21% drop recorded in October, according to the same polling data. Persistent weakness in WPI readings suggests subdued cost pressures for manufacturers, though the transmission to retail prices typically lags.

Overall, the latest inflation signals reflect a moderation phase that could influence policy expectations in the months ahead. Market watchers continue to track both retail and wholesale indicators closely, given their combined impact on growth assessments and monetary policy direction.