SBI Research predicts India’s inflation rate will rise to 4.7% in August, temporarily breaching 6% in October and November, before easing to around 5% in FY27’s final quarter, with food prices remaining the main risk and the Reserve Bank expected to hold rates steady.
SBI Research expects India’s inflation rate to rise to 4.7% in August and then briefly move above 6% in October and November before easing to about 5% in the final quarter of FY27. The bank’s latest note suggests the jump would be temporary rather than the start of a fresh inflation cycle, with headline price pressures expected to soften again as the year progresses.
That view comes even as core inflation, which strips out food and fuel, remains relatively subdued. SBI Research said core CPI edged down to 3.85% in July from the previous month, while core CPI excluding gold stood at 3.44%. Imported inflation also eased, falling to 7.3% from 8.1% in June, pointing to less pressure from global prices.
Food, however, remains the main risk. SBI Research said food inflation rose to 5.52% in July from 5.32% in June, with items such as onions, ginger and garlic adding to the squeeze on household budgets. The report noted that domestic oils and fats inflation moderated to 8.54% and cereals inflation stayed relatively low at 1.68%, but the broader food basket is still doing much of the work in keeping headline inflation elevated.
The outlook has implications for monetary policy. SBI Research expects the Reserve Bank of India to keep the repo rate unchanged at 5.25% through FY27, effectively looking through what it sees as a short-lived breach of the 6% level if underlying inflation stays contained. That would be consistent with the central bank’s recent emphasis on price stability, even after it revised its inflation forecast lower in October 2025 and maintained a relatively benign view of the medium-term outlook.
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