Research and ratings firm Crisil said it has lowered its headline inflation estimate for the Indian economy during the 2025-26 fiscal by 140 basis points, which may lead to a further reduction in interest rate cuts by the Reserve Bank of India (RBI).
In its latest report, the agency pegged the headline inflation during 2025-26 to be at 3.2 per cent, lower than its earlier estimate of 3.5 per cent.
The moderation, said Crisil, implies a decline of 140 basis points in CPI inflation during this financial year, which is likely to give space for monetary easing by the RBI by another 25 basis points before the end of the year.
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Lower inflation and reduced interest rates should increase domestic demand in the economy as global headwinds mount, it added.
The report also factored in excessive rains during the kharif season, which may pose as a risk with major disruptions in key horticulture and foodgrain-growing regions like Punjab, which is facing its worst floods in four decades.
CPI inflation inched up to 2.1 per cent in August 2025, from 1.6 per cent in July, moving above the RBI tolerance threshold of two per cent.
Food inflation has started to move up from low levels but trails the headline inflation, the report said.
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