Crisil projected headline inflation for 2025-26 at 3.2%, down from its earlier 3.5% estimate.
The moderation reflects a 140 basis point decline in CPI inflation this fiscal, creating room for monetary easing.
RBI may cut rates by another 25 basis points this year, Crisil said.
Lower inflation and reduced rates are expected to boost domestic demand amid global headwinds.
Excessive rains during the kharif season pose risks, with Punjab facing its worst floods in four decades.
Research and ratings firm Crisil said that the headline inflation during 2025-26 is projected to be 3.2%, lower than its earlier estimate of 3.5%.
In its latest report, Crisil said that the moderation implies a decline of 140 basis points in CPI inflation during this financial year, which is likely to give space for monetary easing.
It said the RBI may cut rates by another 25 basis points this year.
According to Crisil, lower inflation and reduced interest rates should increase domestic demand in the economy as global headwinds mount.
The report also said that the excessive rains during the kharif season is a risk as it could cause disruptions in key horticulture and foodgrain-growing regions like Punjab which is facing its worst floods in four decades.
CPI inflation inched up to 2.1% in August 2025, from 1.6% in July, moving above the RBI tolerance threshold of two per cent.
Food inflation has started to move up from low levels but trails the headline inflation, the report said.
