New Delhi, Dec 16 (NationPress) Robust grain reserves, reduced oil prices, and persistent factors driving core disinflation are anticipated to keep India's inflation levels moderate in FY27, as outlined in a recent report. HSBC Global Investment Research highlighted that 'we do not foresee additional RBI repo rate reductions, but the risks are skewed towards more easing should growth fall short.'

The Consumer Price Index (CPI) inflation for November registered at 0.7 percent year-on-year, aligning with market expectations. Although there was a month-on-month increase of 0.4 percent, the annual figures remained subdued, attributed to the base effect.

When excluding gold, the headline CPI remained in deflation, recording -0.1 percent in November compared to -0.6 percent previously.

“Food prices have continued their deflation trend for the third consecutive month in annual terms. Sequentially, food prices increased by 0.5 percent month-on-month after two months of decline. Prices of vegetables surged after two months of falling, along with an uptick in protein item prices like eggs, meat, and fish,” the report stated.

“Gold prices kept core inflation elevated. With a CPI basket weight of 1.1 percent and a 59 percent increase in November, gold alone contributed approximately 63 basis points to CPI inflation. Our preferred definition of core (excluding food, energy, housing, and gold) remained steady at 3.2 percent year-on-year in 3Q25, now falling to 2.5 percent in November,” the report detailed.

Following a sharp decline in October, November goods inflation stayed moderate.

The report further stated that substantial cereal production, well-stocked granaries, and winter disinflation are expected to help control food inflation in the near term.

“Moreover, it’s not solely about declining food prices. The high base from last year is likely to keep CPI inflation subdued for the upcoming months. Global oil prices are also low, and more affordable imports from China are anticipated to maintain soft core inflation over an extended period,” it noted.

The Reserve Bank of India (RBI) has reduced its H1 FY27 inflation forecast by 50 basis points, revising it from 4.5 percent to 4 percent.

“However, our predictions are 50 basis points lower than the RBI's (at 3.5 percent). Should we be correct, and the RBI makes further downward adjustments to inflation, there would be room for additional easing should growth necessitate it,” the report concluded.