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Informist, Friday, Feb. 6, 2026

 

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* Revises Apr-Jun FY27 CPI inflation forecast to 4.0% from 3.9%
* Revises Jul-Sept FY27 CPI inflation to 4.2% from 4.0?rlier
* Revises FY26 CPI inflation forecast to 2.1% from 2.0?rlier
* Revises Jan-Mar CPI inflation forecast to 3.2% from 2.9?rlier
* To give CPI projections for FY27 in Apr policy
* Underlying inflation continues to be low
* Slight increase in inflation outlook on precious metal prices
* Inflation estimate raised due to precious metal inflation
* Core CPI inflation ex-gold stable at 2.6% Nov-Dec
* Excluding gold, core inflation was stable in December
* CPI momentum to be muted
* Core inflation, barring precious metals, is seen range-bound
* Adverse weather events pose upside risk to inflation
* Risks to inflation forecasts are evenly balanced
* Underlying CPI pressures remain muted sans precious metals
* Risks to inflation forecasts are evenly balanced
* Indian econ in good spot with strong growth, low inflation
* Benign inflation provides leeway to be growth supportive
* Outlook for growth, inflation remains positive
* Current policy rate apt on growth, inflation outlook
* MPC will be guided by evolving macro conditions, data outlook
* MPC to be guided by data from new series going ahead
* Food supply prospects remain bright near-term
* Robust rabi sowing, healthy reservoir levels to boost agri
 

 

NEW DELHI – The Reserve Bank of India Friday raised its headline inflation forecast for the current quarter ending March by 30 basis points to 3.2% and also hiked the projection for 2025-26 (Apr-Mar) by 10 bps to 2.1%. According to Governor Sanjay Malhotra, "despite the anticipated momentum being muted, unfavourable base effects stemming from large decline in prices observed in Jan-Mar of last year will lead to an uptick in inflation in the corresponding quarer this year."

 

"The slight upward revision in the inflation outlook is primarily due to increase in prices of precious metals, which contribute about 60-70 basis points. The underlying inflation continues to be low," Malhotra said in his monetary policy statement on Friday. "The outlook for CPI inflation in Apr-Jun and Jul-Sept continues to be benign and near the inflation target," the governor added. 

 

In Jan-Mar FY25, inflation had averaged 3.7%. As per latest data, India's headline CPI inflation rose to a three-month high of 1.33% in December from 0.71% in November because of an unfavourable base effect and a rise in core inflation. This was the last CPI print under the current series, which has 2012 as the base year. The statistics ministry will release a new CPI series with 2024 as the base year on Feb. 12.

 

Taking into account the growth-inflation dynamics, the Monetary Policy Committee Friday left the policy repo rate unchanged at 5.25% in a unanimous decision, while also retaining the 'neutral' policy stance. External member Ram Singh was of the view that the stance be changed to accommodative from neutral. 

 

"Benign inflation provides the leeway to remain growth-supportive while preserving financial stability," the governor said. "We remain committed to meet the productive requirements of the economy and sustain the growth momentum."

 

The quarterly break-up of the central bank's latest inflation forecasts is as follows – 4% for Apr-Jun, and 4.2% for Jul-Sept. It had previously forecast inflation in the first quarter of FY27 to average 3.9%, and the second quarter at 4.0%. Malhotra did not give projections for the final two quarters of FY27 and also for the full fiscal year starting Apr. 1.

 

Growth and inflation projections for FY27 will be announced after the April policy meeting after incorporating the new GDP and CPI series, Malhotra said. "Going forward, the MPC will be guided by the evolving macroeconomic conditions and the outlook based on data from the new series in charting the future course of monetary policy," he added.

 

The statistics ministry is currently revising three economic indicators – CPI, IIP, and GDP – with new base years and methodologies after over a decade. The current base year of CPI is 2012 and that of GDP and IIP is FY12. The new series of the three indicators will have increased coverage and updated methadologies based on the current economic environment.  

 

According to the central bank governor, the near-term outlook suggests that food supply prospects remain bright on the back of healthy kharif production, sufficient buffer stocks of foodgrains, favourable rabi sowing, and adequate reservoir levels. 

 

Core inflation--which excludes food and fuel items, whose prices can be volatile--is expected to be range-bound, barring potential volatility induced by prices of precious metals. As per latest data, core inflation in December rose to a 28-month high of 4.6%, led by gold inflation, which increased to a record high of 68.66%. Silver inflation, too, rose to a record high of 97.07% in December, which pushed core inflation higher. 

 

"Excluding precious metals, the underlying inflation pressures remain muted. The risks are evenly balanced," Malhotra said.

 

While the inflation outlook is contained, if not rosy, geopolitical uncertainty coupled with volatility in energy prices and adverse weather events pose upside risks, the governor said. In the past, geopolitical risks and volatility in energy prices complicated inflation management in India, making the Monetary Policy Committee stand pat on interest rates at a high level for months, even when growth needed support.

 

Malhotra said inflation remains below the tolerance band, and its outlook continues to be benign. "Overall, the near-term domestic inflation and growth outlook remain positive," he said.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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