The Economic Survey for 2024-25 on Friday said that food inflation is likely to soften by the end of March this year even as global uncertainties continue to pose risks, bringing a glitter of hope for the 'aam admi'.
"Food inflation is likely to soften in Q4 FY25 with the seasonal easing of vegetable prices and Kharif harvest arrivals," stated the document prepared under the supervision of the Chief Economic Advisor V. Anantha Nageswaran.
"Good Rabi production is likely to contain food prices in the first half of FY26. Adverse weather events and rise in international agricultural commodity prices, however, pose risks to food inflation," he added.
India has managed to bring retail inflation down to a four-year low of 5.4% in FY24 but new economic headwinds—including a weakening rupee, volatile inflation, and declining foreign investment—threaten macroeconomic stability. Pressures in food prices have been driven by factors such as supply chain disruptions and vagaries in weather conditions.
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Food inflation, measured by the Consumer Food Price Index, has increased from 7.5% in FY24 to 8.4% in FY25 (April-December), driven by a few food items such as vegetables and pulses, the survey said.
The survey also said that the country's retail price inflation will align progressively with the target, as per estimates. "Global commodity prices are expected to decline, potentially easing core and food inflation. Long-term price stability could be achieved by robust data systems for monitoring prices, developing climate-resilient crops, reducing crop damage and post-harvest losses," it said.
Further on consumption, the survey noted that rebounding rural demand augurs well. Investment activity is expected to pick up, supported by higher public capex and improving business expectations. Capacity utilisation in manufacturing remains above the long-term average, and private sector order books have shown steady growth, alongside a rise in investment intentions.
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