RBI Raises FY27 Inflation Forecast To 5.2% Amid Rising Crude Oil Prices
The Reserve Bank of India (RBI) has raised its consumer inflation projection for FY27 to 5.2% from 5% earlier, citing evolving macroeconomic conditions and the impact of higher crude oil prices.
RBI Governor Sanjay Malhotra announced the revised forecast after the Monetary Policy Committee (MPC) meeting on October 7, 2026. Inflation is projected at 4.9% in the second quarter, 6% in the third quarter and 5.7% in the fourth quarter of FY27. CPI inflation for the first quarter of FY28 is projected at 5.6%.
Consumer inflation rose to 4.82% in August, remaining above the RBI’s medium-term target of 4% for the third consecutive month. Rising food and fuel prices, crude oil prices near $100 a barrel and deficient monsoon conditions have added to inflationary pressures. Inflation is expected to peak in the third quarter of FY27.
The MPC also voted unanimously to raise the benchmark repo rate by 25 basis points to 5.5%, marking its first increase in nearly four years. Following the revision, the standing deposit facility rate stands at 5.25%, while the marginal standing facility rate and Bank Rate are at 5.75%. The committee also shifted its policy stance to calibrated tightening by a majority.
Higher crude oil prices, amid the West Asian conflict, have put pressure on currencies and complicated the inflation outlook for major economies. The US Federal Reserve also raised its policy rate by 25 basis points in September, while US 10-year Treasury yields remained elevated at around 5.3%.
