Mumbai, April 8 The Reserve Bank of India (RBI) on Wednesday projected the country’s inflation rate based on the Consumer Price Index (CPI) for 2026-27 at 4.6 per cent as the near-term food supply prospects have been boosted by a robust Rabi crop which provides some comfort amid rising oil prices in the international market due to the Iran war.
RBI Governor Sanjaya Malhotra said, “The pass-through of higher global energy prices has resulted in price increases in select fuels such as premium petrol and LPG and diesel for industrial use. On the other hand, the near-term food supply prospects have been boosted by robust Rabi crop providing some comfort.”
Considering all these factors, CPI inflation for 2026-27 is projected to be at 4.6 per cent with Q1 at 4.0 per cent; Q2 at 4.4 per cent; Q3 at 5.2 per cent; and Q4 at 4.7 per cent, said the RBI Governor.
However, persistently elevated energy prices due to the West Asia conflict and possible El Niño conditions (which could have a negative impact on southwest monsoon) pose upside risks to inflation, he observed.
Malhotra said that India’s core inflation, which excludes food and fuel prices, is projected at 4.4 per cent for 2026-27 and, excluding precious metals, it is even lower, indicating that underlying inflation pressures are expected to remain contained.
He also pointed out that since the last policy meeting, geopolitical uncertainties have heightened significantly. 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.
Core inflation pressures remain muted, although supply chain dislocations and the risk of second round effects render the future inflation trajectory uncertain.
The RBI Governor further stated that high frequency indicators till February 2026 suggest the continuation of strong momentum in economic activity. Growth impulses continue to be supported by robust private consumption and investment demand.
However, the West Asia conflict will adversely impact growth. Higher input costs associated with increase in energy prices and international freight and insurance costs along with supply-chain disruptions could constrain availability of key inputs for downstream sectors, thus impairing growth.
The Government has taken several measures targeted at supporting exports and protecting supply chains, which should mitigate the adverse impact of the conflict.
Malhotra also said that the monetary policy committee noted that the intensity and the duration of the conflict in West Asia and the resultant damage to energy and other infrastructure add risk to the inflation and growth outlooks.
However, the fundamentals of the Indian economy are on a stronger footing, providing it with greater resilience to withstand shocks now than in the past. The economy is confronted with a supply shock. It is prudent to wait and watch the changing circumstances and the evolving growth-inflation outlook.
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