New Delhi, Sep 15 || India’s inflation rate, based on the Consumer Price Index (CPI), is expected to remain low due to GST rate cuts and the decline in food prices which will give the Central Bank headroom to reduce the policy rates by another 0.5 per cent (50 bps) this year, according to a Morgan Stanley report released on Monday.
“The benign trend in headline CPI is likely to be perpetuated further by disinflationary impulses from low food prices, GST rate cuts and lack of input price pressures. As such, we expect headline CPI to average at 2.4 per cent year-on-year in FY26, allowing the RBI to cut rates by 25 bps (0.25 per cent) each in October and December,” the report stated.
Headline CPI inflation is tracking below RBI’s target of 4 per cent for the last seven months, partly driven by food price disinflation. However, core inflation remains range bound tracking at 4.2 per cent while core inflation is at 3.1 per cent and below 4 per cent for the last 22 months, indicating sustained moderation in underlying inflation, the report pointed out.