Mumbai, India – The Reserve Bank of India (RBI) has revised its Consumer Price Index (CPI) inflation outlook for the fiscal year 2026-27 to 5.1 percent, a significant 50 basis point increase from its earlier projections. The announcement followed the latest Monetary Policy Committee (MPC) meeting, chaired by RBI Governor Sanjay Malhotra, on June 5, 2026.
Details of the Inflation Forecast
Governor Malhotra detailed the quarterly inflation projections for the upcoming fiscal year:
- Q1 FY27: 4.2 percent
- Q2 FY27: 5.1 percent
- Q3 FY27: 5.9 percent
- Q4 FY27: 5.4 percent
The central bank also projected core inflation, which excludes volatile food and fuel components, at 4.7 percent for the year. While food inflation has seen an uptick, fuel inflation remained muted, contributing to a stable core inflation figure.
Factors Driving the Upward Revision
The decision to raise the inflation forecast was primarily influenced by a confluence of global and domestic factors. Rising global crude oil and natural gas prices, exacerbated by ongoing geopolitical tensions in West Asia, were highlighted as key concerns. These external pressures are compounded by persistent supply-chain disruptions and a weaker Indian rupee, which collectively add to inflationary worries.
Economists Weigh In
The central bank's move aligns with expectations from several economic analysts. Madan Sabnavis, Chief Economist at Bank of Baroda, had anticipated the RBI would likely increase its inflation forecast to around 5 percent. He also suggested the central bank might lower its GDP growth estimate to approximately 6.5 percent from an earlier 6.9 percent, while maintaining the current repo rate and policy stance with a cautious tone.
Similarly, Hitesh Suvarna, an Economist at JM Financial, had projected the RBI would raise its inflation estimate for FY27 by 20 basis points to 4.8 percent and potentially trim the growth forecast to 6.8 percent. The RBI's actual revision of 50 basis points indicates a more pronounced concern regarding future price stability.
Looking Ahead
The revised inflation outlook underscores the challenges faced by policymakers in balancing economic growth with price stability amidst an unpredictable global economic environment. The RBI's focus will remain on managing these pressures to ensure sustainable economic development for India.