Union Bank of India Cuts 2025-26 Headline Inflation Forecast

With food prices lagging seasonal trends and driving headline Consumer Price Index-based retail inflation below 4 percent since February 2025, Union Bank of India has revised downwards its 2025-26 headline inflation forecast from 4 percent to 3.6 percent (largely aligned with the RBI's forecast of 3.7 percent).

- TDG NETWORK

The June retail inflation data is due early next week.

In a report, the bank said June 2025 retail inflation will be at 2.3 percent, with the worst seeming to be over for now. According to them, July figures would be the near-term bottom.

"...in our optimistic scenario, we project FY26 CPI at 3.1 percent while pessimistic scenario forecast stands at 4.2 percent. It is noteworthy that even in the pessimistic scenario, we are projecting the CPI for FY26 at 40 bps below that of FY25," the report read.

More importantly, it added that cooling in inflation to sub-4 percent is largely contingent on a drop in "sticky" food inflation.