Inflation in India is set to remain much lower than the Reserve Bank of India’s (RBI) projections over the current financial year and FY27, according to a report by the State Bank of India (SBI). The report points to a combination of strong domestic factors that are easing price pressures, including a healthy monsoon, higher kharif sowing, adequate reservoir levels, and a comfortable buffer of foodgrain stocks. Additionally, recent GST rate rationalisation is expected to play a significant role in keeping consumer prices in check.
SBI notes that the RBI has already revised its FY26 CPI inflation forecast down by 50 basis points to 2.6 per cent, marking a 160 basis point reduction from April estimates. However, the report suggests that actual inflation in both FY26 and FY27 could be even lower, supported by the positive domestic environment.
Alongside inflation, the RBI has raised its real GDP growth estimate for FY26 to 6.8 per cent, while projecting FY27 inflation at 4.5 per cent. The report highlights that the Monetary Policy Committee’s (MPC) decision to keep policy rates unchanged appears justified amid global economic uncertainty and market volatility.
SBI adds that clear communication by the RBI remains critical to guide expectations and maintain clarity on forward policy moves. The central bank has left the door open for future rate cuts, though the timing remains uncertain, with the MPC’s status quo reflecting a flexible approach backed by comfortable liquidity and a benign external sector. |
