RBI Policy
Inflation views take into account supply shocks, says Malhotra
This story was originally published at 14:51 IST on 8 April 2026
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--RBI Malhotra: Headline inflation is the target
--RBI Malhotra: Main goal is headline inflation stays at target, within band
--RBI Malhotra: Will look at components but target is headline inflation
--RBI Malhotra: Gave core inflation projection after request from mkt
--RBI Malhotra: Energy supply normalising will help keep inflation in check
--RBI Malhotra: Our CPI projections take into account supply shock
NEW DELHI - The Reserve Bank of India has taken into account the impact of supply shocks emanating from the war in West Asia while projecting headline inflation at 4.6% for 2026-27 (Apr-Mar), Governor Sanjay Malhotra said Wednesday. While supply shocks currently pose risks to inflation, energy supply normalising going ahead will help keep inflation in check, he said at the post-policy press conference.
"The ongoing conflict has led to large volatility in international energy and other commodity prices, imparting considerable uncertainty to the near-term inflation outlook," Malhotra had said in his monetary policy statement earlier on Wednesday. "Headline inflation remains contained and below the target, but upside risks to the inflation outlook have increased, driven by increased energy price pressures and probable weather disturbances affecting food prices," he had said.
The central bank's view on inflation for FY27 is in line with economists' view, who now expect inflation to average 4.5-5.0% this year, 50 basis points higher than previously projected. The US-Israel war on Iran, which started Feb. 28, has dented oil and gas supply due to attacks on oil refineries in the West Asia region and also because of the closing of the Strait of Hormuz. Supply of energy to India has also been disrupted as nearly 45% of India's crude oil imports and around 90% of LPG imports pass through the strait.
The central bank, a first, also projected core inflation in FY27 to average 4.4% and said that the RBI will give projections for core inflation hereon. According to Malhotra, the central bank gave core inflation projection Wednesday based on request from the markets. Core inflation excludes food and fuel items, whose prices can be volatile.
Since the war broke out, Brent crude oil prices jumped 52% to $100 per barrel on Tuesday and have eased slightly to around $93 on Wednesday after the US and Iran agreed to a two-week ceasefire to negotiate a definitive agreement for peace between the warring parties and in West Asia.
The central bank governor said that the Monetary Policy Committee's focus continues to be on headline inflation, while giving importance to all components--that tend to be volatile. "Main focus is to keep inflation within the target," he said. The RBI targets inflation at 4%, with 2% tolerance band on either side. End
Reported by Priyasmita Dutta
Edited by Akul Nishant Akhoury
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