New Delhi: The main inflation in India is expected to be below the target of 4 percent of the Reserve Bank of India (RBI) in the next two quarters due to favorable base and decrease in prices of food products. This information was given in a new report.

According to reports by Carey Ratings, the recent softening in inflation has come mainly due to a decrease in food prices and the consumer price index (CPI) inflation has come down to 2.1 percent in June 2025, which is the lowest level since January 2019.

The report said that inflation rates are expected to be low in the near future, but it may start growing from the third quarter and may cross the 4 percent level when the base effect is low in the last quarter of the current financial year.

The Ratings Agency for FY 26 hopes that the Consumer Price Index (CPI) inflation will be an average of around 3.1 percent, lower than the RBI’s 3.7 percent estimate. “However, due to the low base in FY 26, inflation in FY 27 is estimated to increase by about 4.5 percent,” the report said.

In June, the cause of the drastical fall in inflation was defrauding in food and beverages including vegetables, pulses, spices and meat. However, the prices of edible oils and fruits continued to inflation in double digits. According to the report, the high prices of edible oil remain a matter of concern due to India’s dependence on imports and recent cuts in customs and good kharif sowing will help reduce pressure in the coming months. The report said that the RBI may keep the rates unchanged in the upcoming August monetary policy meeting.

With the aggressive stance of the US Federal Reserve and strengthening of the dollar, the central bank can adopt a weight and watch outlook to assess the impact of earlier rates. Despite the global challenges, the position of India’s external sector remains strong and the foreign exchange reserves are at $ 695 billion and in FY 26, the current account deficit is estimated to be only 0.9 percent of the GDP.

The report states that better exports of services will keep the external sector support.