RBI MPC 2026: Central bank trims FY27 inflation outlook to 5%, signals price stability focus

RBI MPC 2026: The Reserve Bank of India (RBI) projected India’s Consumer Price Index (CPI) inflation outlook for FY2026–27 at 5.0 per cent, about 10 basis points lower than earlier projected, after the conclusion of the Monetary Policy Committee (MPC) meeting, led by Governor Sanjay Malhotra.

Quarterly projections are as follows:

Q1 at 5.3%,

Q2 at 4.7%,

Q3 at 5.9%,

Q4 at 5.5%.

Inflation Dynamics

CPI inflation increased to 4.4% in June after remaining below target for 16 consecutive months. This figure is 30 basis points lower than initial projections, Governor Malhotra pointed. The increase in June was primarily driven by higher food, fuel, and fuel-induced inflation in select categories such as restaurant services.

Core inflation, excluding food and fuel, remained unchanged at 3.9% in May and June, he said, despite pressure from higher input costs. When excluding precious metals, core inflation was even lower, ranging between 2.3% and 2.5% during the same period.

Inflation Risks and Projections

Going forward, the El Niño impact on temporal and spatial rainfall distribution remains a major risk, although proactive supply management and adequate stock of oil prices provide comfort. Global oil prices have been highly volatile with sharp two-way movements triggered by geopolitical developments, blurring the near-term outlook.

While generalized inflation pressures remain modest so far, the risk of second-round impacts from higher food, fuel, and other input prices translating into broad-based inflation persists.

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