CPI inflation in July likely to hit historical low, FY26 to be at 3% below RBI estimate of 3.7%: SBI

India's retail inflation is expected to reach a record low in July 2025, with the average inflation for the financial year 2025-26 projected to be significantly lower than the Reserve Bank of India's (RBI) estimate, according to a report by the State Bank of India (SBI)."We believe that the upcoming July 2025 CPI inflation data is set to breach the lowest ever historical print," the report said.SBI projects that the average CPI inflation for FY26 will be between 3.0-3.2 per cent, which is significantly lower than the RBI's estimate of 3.7 per cent and well below the average of 4.6 per cent recorded in FY25.This sharp moderation in inflation comes on the back of a recent 50 basis points rate cut by the RBI in its June policy.The report noted that with benign inflation expectations in place, the central bank is now focusing on supporting capital formation to ensure more durable and sustained growth.As noted by the Monetary Policy Committee (MPC) in its resolution, the panel remains data-dependent while deciding the future course of monetary policy. The aim is to strike a balance between growth and inflation, the report added.Looking ahead, SBI sees the current inflation trend as firmly benign, even as external trade-related disruptions and unpredictable price movements continue to pose risks.Still, the report hinted at the possibility of another 25 basis points rate cut "sooner than later" to further support economic growth as global uncertainties make it necessary to build for the future.It stated "the plot seems to be spiced with a further 25 bps rate cut (sooner than later) to give an adrenaline boost to the economic juggernaut as global developments necessitate us to build today for future". India's CPI inflation in June 2025 fell to 77-month low at 2.10 per cent, down from 2.82 per cent in May 2025 and 5.08 per cent in June 2024.This decline was largely driven by a sharp fall in food inflation, which also hit a 77-month low of -0.20 per cent. The fall in prices of key food items such as vegetables, pulses, and spices contributed significantly to this decline.However, the report flagged concerns around imported inflation, which continued to rise for the 13th consecutive month in June 2025. Higher gold and silver prices were the main contributors to this increase.The share of imported inflation in the overall CPI build-up rose to 71 per cent in June 2025, up from 50 per cent in May.