What is the projected inflation rate for India by FY25

Solution

The projected inflation rate for India by FY25 is 4.5% ​. The Economic survey highlighted the following as the state of the economy in relation to inflation: Retail inflation in 2023-24 was 5.4%, the lowest level since the Covid-19 pandemic. Food inflation increased from 6.6% in 2022-23 to 7.5% in 2023-24. This was driven by higher food inflation caused by Russia-Ukraine war and domestic weather conditions. Core inflation (which excludes food and energy prices) moderated in 2023-24 driven by services such as housing rental inflation. According to the Reserve Bank of India, assuming a normal monsoon and no further external or policy shocks, the RBI expects headline inflation to be 4.5 per cent in FY25 and 4.1 per cent in FY26. The Survey noted that India’s short-term inflation outlook is benign. However, long-term price stability may need certain measures. These include: (i) expansion in cultivation of pulses, (ii) developing modern storage facilities for vegetables, and (iii) effective monitoring of build-up of prices from the farm gate to the final consumer.