Economic Survey: India to face higher inflation in FY27
What's the story
The Economic Survey presented in Parliament today has projected a gradual rise in India's inflation for the upcoming fiscal year. However, it is expected to remain within the Reserve Bank of India's (RBI) target range. The survey credits soft global commodity prices and easing food inflation as major factors influencing this outlook. It also notes that a weaker rupee could pose risks by potentially leading to imported inflation, while firm metal prices may contribute to keeping core inflation elevated.
Inflation projection
RBI, IMF predict inflation to rise toward 4% target
The RBI and the International Monetary Fund (IMF) have both predicted a gradual rise in headline inflation toward the 4% target over the next two years. While a weaker rupee could lead to imported inflation, its impact is likely to be offset by falling global commodity prices, particularly crude oil. However, rising prices of precious metals and certain base metals could keep core inflation elevated.
Inflation increase
Headline and core inflation expected to rise in FY27
The survey also anticipates an increase in both headline and core inflation (excluding precious metals) for FY27 compared to FY26. This is indicative of a normalization of price pressures. The RBI has forecast headline inflation at 3.9$ in Q1 FY27 and 4% in Q2. Domestically, retail inflation eased to 1.7% in FY26, driven mainly by a steep fall in food prices. Lower costs of vegetables, pulses and spices, aided by favorable farm conditions and targeted policy measures, led the decline.