India’s retail inflation is expected to remain well under control in the third quarter of FY26, with headline CPI inflation likely to settle at 0.4 per cent, slightly lower than the Reserve Bank of India’s projection of 0.6 per cent, according to a report by Bank of Baroda on Monday.
The bank said easing food prices and stable core inflation have continued to provide relief to consumers despite some recent sequential rise in vegetable prices.
The report noted that CPI inflation continued to remain below the lower band of the RBI’s target range for the third consecutive month.
Retail inflation stood at just 0.7 per cent in November 2025, a sharp fall from 5.5 per cent recorded in November last year.
This came in even with a slightly unfavourable base effect and was lower than Bank of Baroda’s own estimate of 0.9 per cent.
Food prices remained the biggest support for lower inflation, with food inflation staying in deflationary territory at minus 3.9 per cent in November, although the pace of decline slowed compared to October.
Vegetables and pulses saw sharp price declines, with vegetable inflation at minus 22.2 per cent and pulses at minus 15.9 per cent, supported by better production and higher market arrivals.
The report pointed out that five out of ten major food items are still recording inflation below 4 per cent.
While food inflation showed some sequential build-up, especially in vegetables and eggs due to seasonal factors, Bank of Baroda said this is not a major concern.
On a month-on-month basis, the consumer food price index rose by 0.5 per cent in November, both on adjusted and unadjusted terms, indicating limited seasonal pressure.
The report highlighted that prices of tomato, onion and potato have shown some upward movement in early December, with tomato prices rising 5.5 per cent year-on-year in the first 11 days.
However, on a cumulative basis, prices of these key vegetables are still down by nearly 25 per cent, which is expected to continue dragging down headline inflation.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
