India’s Economic Outlook: Benign Inflation Outlook

• India’s economy is showing cautious optimism due to steady demand growth and moderate Q2 economic activity.

• Food inflation, which spiked consumer prices by 6.2% last month, is expected to cool off in the coming months.

• The Finance Ministry’s economic affairs department noted improved FMCG sales volumes in Q2 FY25 in both urban and rural areas.

• The ministry acknowledged concerns of softening consumer sentiments and faltering demand, particularly in urban India, and a moderation in industrial momentum.

• Early November trends suggest a moderation in key food prices, with bright agricultural production prospects making the inflation outlook benign.

• Geopolitical factors may continue to impact domestic inflation and supply chains.