CPI inflation surge will strengthen liquidity support: SBI

Key Highlights

• Food inflation remained the dominant disinflationary force in the economy.
• For the first time in the history of the current CPI series, food inflation stayed in negative territory for seven consecutive months, while annual food inflation averaged just 0.4 per cent in 2025, far below the 14-year average of 5.8 per cent.
• SBI Research attributed this trend largely to supply-side factors, particularly in food commodities.
• An item-wise decomposition of CPI showed that 171 of the 299 CPI items were driven by supply-side factors, including 123 food items, while 99 items were demand-driven and 29 neutral.
• This confirms that food-related supply dynamics played a decisive role in keeping inflation range-bound through most of 2025 and are likely to continue influencing prices into 2026.