Average Inflation To Be At 2.1% Due To Subdued Food Inflation & Contained Demand Pressures

New Delhi: The average inflation for the current financial year (FY26) is expected at 2.1 per cent, due to subdued food inflation and contained demand pressures, a report said on Wednesday. "From a monetary policy perspective, if growth weakens in H2 FY26, the latest inflation readings could create scope for a rate cut," CareEdge Ratings said in its report.

The ratings agency maintained its FY26‑end USD/INR forecast at 85–87, due to a softer dollar, a firm yuan, a manageable current account deficit (CAD) and expectations around the US-India trade deal.The report also projected that global trade volumes will grow at about 2.9 per cent on average in 2025-26.

It also cited IMF estimates that India’s exports of goods and services can moderate to roughly 16 per cent of GDP by 2030, from 21 per cent currently.The report noted that the 2025 global growth forecast was raised by 20 basis points, amid trade frontloading and gradual adaptation to trade tensions.

Overall, risks to growth remain tilted to the downside amid continued uncertainty and rising protectionism.India’s non‑petroleum exports rose 7 per cent in H1 FY26, though petroleum exports weighed on the overall export growth. Imports grew a modest 4.5 per cent in H1FY26, led by non‑petroleum goods.

India’s exports to the United States rose by 13 per cent in H1 FY26, it said, adding that the US remains the largest export destination for merchandise goods, accounting for nearly 20 per cent share in India’s total exports.Amongst India’s major exports to the US, exports of all commodities except electronic goods and petroleum products witnessed a contraction in September, the report mentioned.

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