According to a report by the Bank of Baroda, India's retail inflation is projected to reach 5% in the fiscal year 2027, largely influenced by rising food and energy prices. The report indicates that core inflation is likely to stabilize around 4.5% during this period. Recent trends show a notable increase in domestic price pressures, with retail inflation rising from an average of 3.1% in early 2026 to 3.48% YoY in April 2026, driven by food inflation which reached 4.2%. Additionally, wholesale inflation surged to 8.3% YoY in April, marking a significant increase attributed to fuel and manufactured products. The report highlights that global energy and food prices pose risks to domestic inflation, particularly in segments such as edible oils and pulses. Furthermore, the potential emergence of El Nino could threaten food production, especially in major crop-producing regions facing expected below-normal rainfall. The government’s strong foodgrain surplus has allowed for robust procurement and relaxed export restrictions, but future crop yields remain a concern.