In a detailed monetary policy update, the RBI has pegged CPI inflation at 4.6% for FY 2026-27, buoyed by expectations of ample rabi crop yields that could ease food inflation even as international crude prices climb.
Governor Sanjay Malhotra pointed to the visible impact of global energy volatility on domestic fuels like premium petrol and LPG. Yet, he expressed optimism: ‘A strong rabi season promises better food supplies ahead, mitigating some inflationary pressures.’
The forecast outlines a varied trajectory: 4.0% for the April-June quarter, rising to 4.4% in July-September, peaking at 5.2% in October-December, and settling at 4.7% in the final quarter.
Risks loom large from West Asian conflicts driving sustained oil price increases and possible El Niño effects on agriculture. Core inflation is expected to hold at 4.4%, with even lower rates excluding gold and silver, indicating domestic demand remains manageable.
Post-policy, geopolitical uncertainties have intensified, with current inflation below target but vulnerable to energy and weather shocks. Supply chain hiccups and secondary effects add layers of unpredictability.
Economic momentum persists, supported by robust private spending and investments, per recent data. Government measures to safeguard exports and supply lines aim to cushion conflict impacts.
Malhotra emphasized the MPC’s vigilance on West Asia’s fallout, which threatens both growth and prices. India’s resilient base offers resilience, justifying a cautious stance in this supply-driven turbulence.
