RBI Adjusts CPI Inflation Forecast to 5.1% Amid Rising Energy Prices
RBI flags inflation risks, revises CPI outlook for FY27 upwards to 5.1%
Image: The Economic Times
The Reserve Bank of India has raised its Consumer Price Index (CPI) inflation outlook for FY27 to 5.1% from 4.6% due to rising energy costs and uncertain food supply, influenced by the subnormal monsoon and El Nino. This inflation could diminish household purchasing power.
- 01The RBI has revised its CPI inflation forecast for FY27 to 5.1% from 4.6%.
- 02Rising energy prices have already impacted various sectors, including commercial LPG and industrial raw materials.
- 03The price of petrol has increased by 7.4% and diesel by 8.4% since May 2026, contributing to inflationary pressures.
- 04RBI Governor Sanjay Malhotra highlighted risks to inflation and growth due to geopolitical uncertainties and supply chain disruptions.
- 05Headline CPI inflation rose to 3.5% in April 2026, driven primarily by food inflation.
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The Reserve Bank of India (RBI) has expressed concerns about rising inflation, revising its Consumer Price Index (CPI) forecast for FY27 to 5.1%, up from 4.6%. This adjustment comes as the central bank acknowledges the impact of increasing energy prices on purchasing power and the uncertainty surrounding food supply due to a subnormal southwest monsoon and the El Nino phenomenon. RBI Governor Sanjay Malhotra emphasized that the inflationary risks are compounded by geopolitical tensions and the subsequent effects on supply chains. The recent increases in fuel prices—7.4% for petrol and 8.4% for diesel—are expected to exert additional pressure on CPI inflation, potentially affecting households' purchasing power. The headline CPI inflation recorded 3.4% in March and 3.5% in April 2026, primarily driven by food inflation. Malhotra cautioned that the second-round effects of higher input costs could further elevate CPI inflation in the upcoming months.
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Rising inflation could reduce household purchasing power significantly, affecting daily expenses and savings.
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