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Informist, Wednesday, Aug. 5, 2026

 

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--RBI Malhotra: Revises FY27 CPI inflation forecast to 5.0% from 5.1?rlier
--RBI Malhotra: Revises Jul-Sept CPI inflation forecast to 4.7% from 5.1?rlier
--RBI Malhotra: Retains Oct-Dec CPI inflation forecast at 5.9%
--RBI Malhotra: Revises Jan-Mar CPI inflation forecast to 5.5% from 5.4?rlier
--RBI Malhotra: Forecasts Apr-Jun FY28 CPI inflation at 5.3%
--RBI Malhotra: Revises FY27 CPI core inflation forecast to 4.3% from 4.7?rlier
--RBI Malhotra: Higher CPI in June due to food, fuel inflation
--RBI Malhotra: Core CPI ex precious metals 2.3-2.5% in May-Jun
--RBI Malhotra: Spatial distribution of rainfall a risk for food inflation
--RBI Malhotra: El Nino on rainfall distribution a major risk going fwd
--RBI Malhotra: Generalised inflation remains modest
--RBI Malhotra: Generalised inflation pressures modest as of now
--RBI Malhotra: Risks to inflation forecasts are evenly balanced
--RBI Malhotra: Risks to inflation are evenly balanced
--RBI Malhotra: Core CPI ex precious metals to align with core CPI end-FY27
--RBI Malhotra: MPC noted headline CPI above aim, as expected
--RBI Malhotra: MPC noted limited passthrough of price pressures
--RBI Malhotra: Inflation higher mainly on fuel, food prices
--RBI Malhotra: MPC noted core CPI inflation remains benign
--RBI Malhotra: Headline inflation expected to rise in near-term
--RBI Malhotra: MPC noted CPI inflation to peak in Q3, then moderate
--RBI Malhotra: Headline CPI may peak in Q3
--RBI Malhotra: Little sign of generalised inflation
--RBI Malhotra: Headline, core CPI may align by end FY27
--RBI Malhotra: MPC noted CPI up on supply-side pressures
--RBI Malhotra: MPC noted CPI rise not broad-based
--RBI Malhotra: Core inflation moderate, expected to fall after peaking in Q3
--RBI Malhotra: Need for greater clarity to emerge on inflation path
--RBI Malhotra: MPC underscored to maintain close vigil on inflation
--RBI Malhotra: MPC resolute in commitment to align inflation to target
--RBI Malhotra: Supply-side pressures from West Asia war eased from Jun
--RBI Malhotra: Re-escalation of West Asia war has amplified volatility
--RBI Malhotra: Re-escalation of W Asia war renewed supply chain uncertainty

 

NEW DELHI – The Reserve Bank of India Wednesday cut the outlook for 2026-27 (Apr-Mar) headline inflation by 10 basis points to 5.0% even as El Nino and West Asia war-led uncertainties continued to linger, Governor Sanjay Malhotra said. Volatile oil prices and its second-round effects continue to pose downside risks, he said, adding that inflation was seen rising in the near term. The central bank also cut the inflation forecast for Jul-Sept by 40 bps to 4.7%.

 

"To sum up, even though headline inflation is projected to increase, it is primarily on account of supply-side pressures caused by food and fuel; it is not getting broad-based," the RBI Governor said after the third bi-monthly meeting of the Monetary Policy Committee for FY27. "Although generalised inflation pressures continue to remain modest so far, the risks of second-round impact of higher food, fuel and other input prices translating to broad-based inflation persist," Malhotra said.

 

Despite inflation likely to be higher in the near term, the RBI's Monetary Policy Committee Wednesday left the policy repo rate unchanged at 5.25% in a unanimous decision, while also retaining the "neutral" policy stance. "The MPC underscored that it will maintain a close vigil and remain resolute in its commitment to align inflation with the target," Malhotra said in his statement.

 

Malhotra said that there was a need for greater clarity to emerge regarding inflation--its path and composition before taking any policy action. "Any such action would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalisation of the underlying inflation from its benign levels seen hitherto," he said.

 

Latest data showed retail inflation maintained its upward trajectory in June, crossing the RBI's medium-term target of 4% for the first time in 17 months. Headline inflation rose to 4.38% on year in June, an 18-month-high, from 3.93% in May. At 4.38% for June, CPI inflation averaged 3.93% for the June quarter, lower than the RBI's projection of 4.2%. "The realised inflation for Q1, however, remained marginally lower than projections, reflecting limited pass-through of cost pressures," Malhotra said.

 

According to economists, headline inflation is seen rising to 4.5–4.9% in July, topping the print of June, which was sharply high due to war-led food and fuel inflation continuing to seep into consumer prices.

 

The quarterly break-up of the central bank's latest inflation forecasts is as follows--4.7% for Jul-Sept, 5.9% for Oct-Dec and 5.5% for Jan-Mar. It had previously forecast inflation in the second quarter of FY27 to average 5.1%, the third quarter at 5.9%, and the fourth quarter at 5.4%. Malhotra also projected core inflation to average 4.3% in FY27, 40 bps lower than the earlier projection. "Core inflation, excluding precious metals, is expected to be lower in the near term, suggesting that demand pressures remain contained," the governor said.

 

"As projected earlier, headline inflation is expected to rise further in the near term and peak in Oct-Dec, primarily due to food and fuel, before moderating thereafter," he said. The underlying inflation is likely to align with core inflation towards the end of the financial year, he added. The RBI projected inflation in Apr-Jun of FY28 to average 5.3%. 

 

India has been facing higher price pressures after the West Asia war started at the end of February. Global crude oil prices surged to as much as $123 a barrel after the war started from the sub $73 a barrel before Feb. 28. Since then, oil prices have seen much ebb and flow and were trading around $79 per barrel Wednesday. While the oil prices have cooled off from the highs, they remain volatile, with any flare-ups in the West Asia war impacting their levels. "Global oil prices have remained highly volatile with sharp two-way movements triggered by geopolitical developments, blurring the near-term outlook," Malhotra said.

 

To add to this, India is facing super El Nino conditions this year. The India Meteorological Department has projected the southwest monsoon rainfall to be below normal at 90% of the long-period average. According to the governor, El Nino's impact on temporal and spatial rainfall distribution continues to remain a major risk for India. "...although proactive supply management and adequate stock of foodgrains should provide comfort," he said.

 

All said, while global uncertainties have impacted India's domestic growth-inflation outlook adversely, the stronger macroeconomic fundamentals of the Indian economy are helping navigate this global shock resolutely, the governor said. "We shall continue to implement policies that further fortify our economy. Whether it is facilitating sustainable growth or promoting consumer protection; whether it is preserving the stability of prices, the financial system or the currency, we will do whatever it takes to ensure the same," he said.  End

 

US$1 = INR 95.07

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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