Economic Indicators Strong, Rate Cuts Can Propel Growth: SBI Report

FY26 inflation is projected in the range of 4-4.2%, while core inflation may range between 4.2 and 4.4%. RBI may implement successive rate cuts in April and August, the report said

India’s economic indicators for February reflect a moderation in inflation, improved industrial output and strong corporate earnings, according to the latest report of SBI Ecowrap. While inflation trends remain favourable in the short term, imported inflation risks and rupee depreciation pose challenges going forward.

“The RBI’s expected rate cuts could further bolster growth, providing a positive environment for capex expansion and industrial performance. The evolving economic landscape suggests a cautious but optimistic outlook for the coming months,” said the report published by the State Bank of India's Economic Research Department.

India's CPI inflation fell to a seven-month low of 3.6 per cent in February, due to a substantial decline in food and beverage prices. Food and beverages inflation eased by 185 basis points (on-month) to 3.84 per cent, mainly due to a sharp decline in vegetable prices.

Vegetable CPI declined sharply, entering negative territory (1.07 per cent) for the first time in 20 months. Approximately 80 per cent of this decline was attributed to garlic, potatoes and tomatoes. CPI inflation is expected to decline to 3.9 per cent in Q4 FY25 and average 4.7 per cent for FY25, the report projected.

FY26 inflation is projected in the range of 4-4.2 per cent, while core inflation may range between 4.2 and 4.4 per cent. The Reserve Bank of India (RBI) may implement successive rate cuts in April and August, with an overall expected cumulative rate cut of at least 75 basis points.