New Delhi, October 7 (IANS). The Reserve Bank of India (RBI) has estimated Consumer Price Index (CPI) based inflation at 5.2 percent for the current financial year 2026-27. The central bank said on Wednesday that the inflation situation is no longer as favorable as last year and supply side risks have also increased with the rise in food and energy prices.
Announcing the decisions of the Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra said that inflation is estimated to be 4.9 percent in the second quarter of the current financial year, 6 percent in the third quarter and 5.7 percent in the fourth quarter.
The central bank has estimated inflation at 5.6 percent for the first quarter of the financial year 2027-28. At the same time, core inflation for the current financial year has been estimated at 4.4 percent.
RBI Governor said that CPI inflation increased from 4.5 percent to 4.8 percent in August. The main reason for this increase was the rise in food and fuel prices.
He said core inflation has also seen a rise, indicating that price rise pressures are now beginning to spread to more sectors of the economy.
According to RBI, food inflation is no longer limited to a few select items. There has been a sharp increase in the prices of commodities like sugar and onion, while adverse base effect was also one of the reasons behind the increase in fuel inflation in August.
According to central bank data, core inflation stood at 4.2 percent in August, while core inflation excluding precious metals was recorded at 2.9 percent.
RBI warned that supply side risks may persist in the coming months. A weak monsoon, ongoing El Nino conditions, higher energy prices and strength in other commodity prices could put additional pressure on inflation.
The report also said that the share of those items included in the CPI basket, whose inflation rate is more than 4 percent, continuously increased to about 37 percent in August. This suggests that inflationary pressures are becoming more widespread.
“Inflation and its outlook are no longer as favorable as they were last year,” Sanjay Malhotra said. He said that the average CPI inflation in the next three quarters is expected to be around 5.8 percent, while the core inflation may be around 4.4 percent.
In this context, RBI has increased the repo rate by 25 basis points to 5.50 percent. The Governor said that in the current circumstances, rebalancing of policy interest rates had become necessary.
–IANS
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