Inflation Outlook Softens Marginally to 5.00% for FY27
Source: RBI
- The Reserve Bank of India’s Monetary Policy Committee (MPC) voted unanimously to keep the repo rate unchanged at 5.25% and decided to retain its neutral stance.
- On inflation, the central bank noted that headline CPI inflation edged up above the target, rising to 4.38% in June 2026, primarily on account of food and fuel, with little signs of generalisation of price pressures so far, while core inflation remained benign at 3.90% in June 2026. Headline inflation is expected to rise further in the near term and peak in Q3FY27 to 5.90%, before moderating thereafter. CPI inflation for FY27 is projected at 5.00%, lower than the 5.10% forecast in the previous policy meeting, although risks remain from food and fuel prices as well as weather-related factors.
- The central bank said that the global economic environment remains uncertain due to geopolitical tensions, volatile crude oil prices and trade disruptions. Also, it was noted that growth continues to be supported by resilient domestic demand, sustained expansion in manufacturing and services activity, and robust exports. Domestic economic activity has exhibited resilience, although the outlook remains hazy due to uncertainties regarding the south-west monsoon, El Nino, geopolitics and global trade policy. Real GDP growth for FY27 is projected at 6.7%, up from 6.6% projected in the previous policy meeting, with risks assessed as evenly balanced.
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