Chennai: India’s consumer price inflation will progressively align towards the inflation target in FY26 in the event of a normal monsoon and no further external or policy shocks. However, Economic Survey finds food inflation as a matter of concern and calls for investment in climate-resilient crops, improved food stock management, and greater efficiency in supply chains.

The risk to inflation from increases in commodity prices seems limited in 2025- 2026. However, the risk of synchronised price increases remains, especially during periods of global economic stress.

Taking advantage of the steep decline in inflation, major central banks have implemented a policy pivot to lower policy rates. However, there is also uncertainty regarding the levels of the year-ahead and terminal policy rates across economies.

The RBI and the IMF have projected that India’s consumer price inflation will progressively align towards the inflation target in FY26. RBI revised its inflation projection from 4.5 per cent to 4.8 per cent in FY25. Assuming a normal monsoon and no further external or policy shocks, the RBI expects headline inflation to be 4.2 per cent in FY26.

Nevertheless, India faces a persistent deficit in the production of pulses and oilseeds, along with frequent fluctuations in tomato and onion production. To address this, focused research is needed to develop climate-resilient crop varieties, enhancing yield and reducing crop damage. Efforts to expand the area under pulses in rice-fallow regions are likely to help.

Farmers should receive training on best practices, the use of high-yield and disease-resistant seed varieties, and targeted interventions to improve agricultural practices in the major growing regions for pulses, tomatoes, and onions.

Robust data collection and analysis systems to monitor prices, stocks, and storage and processing facilities and linking them by various agencies may help quantify prices from the farm gate to the final consumer.