The Economic survey 2025‑26 — presented in parliament by Finance minister Nirmala Sitharaman ahead of the Union Budget — highlights a nuanced inflation story in India’s economy. Despite volatility in food prices, overall inflation has remained subdued and stable, reflecting strong supply management and resilient macroeconomic conditions.

1. Food Prices Were Volatile, But Not Inflationary

Throughout FY26, food prices saw occasional swings due to seasonal and supply dynamics — a typical pattern in agricultural markets. But despite this volatility, the survey notes that food inflation did not spill over into broader price pressures, thanks mainly to improved supply conditions and infrastructure.

2. Core Inflation Stayed Under Control

While food prices showed movement up and down, core inflation — which excludes volatile food and fuel components — remained subdued. This reflected stronger supply chains, logistics efficiency, and productive capacity gains across sectors, helping stabilise prices overall.

3. Stable Inflation Expectations Supported Stability

The survey highlights that inflation expectations among households and markets remained anchored, reducing risk of a second‑round price spiral even with food price fluctuations. This has helped preserve macroeconomic stability in an uncertain global environment.

4. Agriculture Played a Buffering Role

Normal monsoon conditions and better farm prospects helped ease some food price pressures. Combined with buffer stock policies and other government measures, this mitigated risk of persistent food inflation — a common concern for india since food accounts for a large part of the cpi basket.

5. Infrastructure Eased Supply Bottlenecks

Expansion of logistics infrastructure, including roads, airports, inland waterways, and freight corridors, played a key role in reducing distribution costs and food price pressures — smoothing out some volatility.

6. Headline Inflation Remained Subdued

Although the survey discussed food price volatility, other sources show that headline cpi inflation dipped to multi‑year lows during the year (in some months even below 1 %), largely influenced by easing food inflation and price corrections in key items like vegetables.

7. FY26 Inflation Still Within Target Range

Across FY26, multiple inflation measures indicated subdued price pressures: overall cpi inflation was broadly within or below the Reserve bank of India’s 4 % target band, even as inflation in individual food items fluctuated.

8. Policy Space for Growth‑Friendly Measures

With inflation well‑anchored, the RBI has had more flexibility to support growth — including through interest rate adjustments — without stoking price pressures. This is crucial in a phase where sustaining demand and investment is a priority.

9. Macro Stability Amid Global Uncertainty

The Survey’s findings suggest that despite global volatility — including commodity price swings and supply chain disruptions — India has managed to keep inflation under control as part of a broader run of economic resilience.

10. What This Means for Consumers

Consumers benefit from stable prices despite food swings.

Purchasing power is better preserved when inflation stays subdued.

Policy makers have more room to focus on growth, jobs, and investment without worrying about runaway prices.

In short, India’s macro policy framework has managed to absorb food price ups and downs without destabilising inflation, reflecting stronger supply management, infrastructure improvements and stable inflation expectations.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.