Mumbai, April 8 (NationPress) On Wednesday, the Reserve Bank of India (RBI) forecasted the nation’s inflation rate based on the Consumer Price Index (CPI) for the fiscal year 2026-27 to be at 4.6 percent. This optimistic outlook is attributed to the promising food supply brought about by a strong Rabi crop, providing some relief amid escalating oil prices globally due to the ongoing conflict in Iran.

According to RBI Governor Sanjaya Malhotra, “The transmission of higher global energy prices has led to increased costs in certain fuels, including premium petrol, LPG, and industrial diesel. However, the strong Rabi crop has improved the near-term food supply outlook, which offers some reassurance.”

Taking these elements into account, the RBI estimates CPI inflation for 2026-27 at 4.6 percent, with quarterly projections of 4.0 percent for Q1, 4.4 percent for Q2, 5.2 percent for Q3, and 4.7 percent for Q4.

Nevertheless, the consistently high energy prices resulting from the West Asia conflict and potential El Niño conditions, which could negatively impact the southwest monsoon, present risks for inflation, he noted.

Malhotra indicated that India’s core inflation, which excludes food and fuel costs, is expected to be 4.4 percent for 2026-27. When precious metals are excluded, the rate is even lower, suggesting that underlying inflation pressures are likely to remain subdued.

He also highlighted that geopolitical uncertainties have escalated since the last policy meeting. While headline inflation remains below the target and well-contained, the risks to the inflation outlook have risen, driven by higher energy prices and potential weather-related disruptions affecting food prices.

Although core inflation pressures are modest, disruptions in the supply chain and the risk of second-round effects render future inflation trends unpredictable.

The RBI Governor further mentioned that recent high-frequency indicators up to February 2026 signal continued strong economic momentum, supported by robust private consumption and investment.

However, the conflict in West Asia is likely to hinder economic growth. Rising input costs linked to increased energy prices, along with international freight and insurance expenses, could limit the availability of essential inputs for downstream sectors, thus hampering growth.

The government has implemented several initiatives aimed at bolstering exports and safeguarding supply chains, which should help mitigate the conflict's negative effects.

Malhotra added that the monetary policy committee has recognized that the intensity and duration of the West Asia conflict, along with the consequent damage to energy and other infrastructures, pose risks to both inflation and growth outlooks.

Despite these challenges, the fundamentals of the Indian economy are on a more solid foundation, providing greater resilience to withstand shocks compared to previous times. The economy currently faces a supply shock, making it wise to observe how circumstances evolve and the growth-inflation outlook unfolds.