| Quarterly inflation is projected at 4.2% in Q1, 5.1% in Q2, 5.9% in Q3 and 5.4% in Q4.
Core inflation is estimated at 4.7% for FY27. International crude oil prices averaged around $110 per barrel during April-May, increasing inflation risks. Higher fuel, LPG, chemical, metal, rubber and plastic prices could push up consumer prices through cost pass-through. |
The Reserve Bank of India has raised the consumer price index (CPI) inflation at 5.1 per cent for the fiscal year from 4.6 per cent due to a sharp rise in global energy prices and pass-through to domestic fuel prices.
“CPI inflation for 2026-27 is projected to be at 5.1 per cent with Q1 at 4.2 per cent; Q2 at 5.1 per cent; Q3 at 5.9 per cent; and Q4 at 5.4 per cent. Core inflation is projected at 4.7 per cent for 2026-27. These forecasts are subject to upside risks due to global supply chain disruptions, global commodity price shocks, uncertainty about the spatial and temporal distribution of the south-west
monsoon and El Niño conditions,” RBI Governor Sanjay Malhotra said in the monetary policy statement.
Prices of several industrial inputs, including commercial LPG, chemicals, base metals, rubber and plastic products, have also increased, raising the possibility of firms passing on higher costs to consumers, he said.
At the same time, the RBI said adequate food grain stocks and satisfactory reservoir levels provide some cushion against food price pressures.
Price pressure
The central bank noted that headline inflation remained below its 4 per cent target band during March and April 2026 at 3.4 per cent and 3.5 per cent, respectively. Core inflation remained stable at 3.7 per cent during the two months, while core inflation excluding precious metals was significantly lower at 2.1-2.2 per cent.
The inflation outlook has, however, deteriorated due to a sharp rise in global energy prices. International crude oil prices for the Indian basket averaged around $110 per barrel during April-May, substantially above the assumptions made in the previous policy review.
The RBI said the partial pass-through of elevated crude prices to domestic petrol and diesel prices began in May.
Wholesale price inflation recorded a sharp increase in April as rising energy and input costs filtered through the production chain.
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