Mumbai, August 5: The Reserve Bank of India (RBI) has projected a retail inflation rate of 5% for the fiscal year 2027. The central bank also indicated that inflation may rise in the short term due to global instability.
During the announcement of the Monetary Policy Committee (MPC) decisions, Governor Sanjay Malhotra noted that retail inflation increased to 4.4% in June after remaining below the central bank’s target of 4% for 16 consecutive months.
He explained that inflation in the first quarter was 30 basis points lower than the RBI’s earlier estimate, suggesting that input cost pressures have remained limited.
Despite rising prices for food and fuel, core inflation (excluding food and fuel) remained stable at 3.9% during May and June.
Excluding precious metals, core inflation was even lower, ranging from 2.3% to 2.5%, indicating that demand-side inflationary pressures are subdued.
However, he emphasized that the Indian economy remains robust, supported by domestic demand, ongoing activities in the manufacturing and service sectors, positive investment trends, and strong exports.
The Governor stated that the RBI expects retail inflation for FY27 to be 5%, with projections of 4.7% in the second quarter, 5.9% in the third quarter, and 5.5% in the fourth quarter.
For the first quarter of FY28, inflation is projected at 5.3%.
Malhotra added that risks to the inflation forecast persist, linked to the impact of El Niño on rainfall, fluctuations in global crude oil prices, and geopolitical developments.
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