Archive · 25 Nov 2025
RBI's Inflation Forecasts Flawed Due to Data Issues
The Reserve Bank of India (RBI) has been having a hard time predicting inflation and GDP growth accurately.
This is because the data they use is often not very reliable or up-to-date.
For example, their recent inflation forecast for the March quarter was off by 0.7 percentage points, which is a big difference.
Other forecasters also missed the mark because food prices have been very unpredictable.
The RBI and other agencies need better and more timely data to make accurate predictions.
They are working on improving data collection and using new methods like artificial intelligence to make better forecasts.
Without these improvements, it will be hard to make good economic decisions.
RBI's inflation forecast for the March quarter was off by 0.7 percentage points, the largest variance in years.
Other forecasters also missed the mark due to unpredictable food prices and base effects.
GDP forecasting is challenging due to long reporting lags and the informal economy's size.
The RBI and government are working to strengthen data sources and overhaul indices for better accuracy.
Improved data collection and advanced forecasting models are needed for reliable economic predictions.
- Who
- Reserve Bank of India (RBI) and other forecasters
- What
- Flawed inflation and GDP forecasts due to poor data quality and long reporting lags
- When
- Recent revisions and ongoing data issues
- Where
- India
- Why
- Poor data quality, long reporting lags, and volatile food prices
- Organization
- Reserve Bank of India (RBI)
- Former Governors
- YV Reddy, Duvvuri Subbarao
- Inflation Forecast Variance
- 0.7 percentage points (March quarter)
- FY26 Inflation Forecast
- 2.6%
- GDP Growth (June quarter)
- 7.8% year-on-year
- US Tariff Impact
- 50% on a range of goods
- Data Improvement Efforts
- Strengthening 200 critical data sources and overhauling indices