RBI Lowers FY27 Inflation Projection to 5%; Q4 Estimate Raised to 5.5%

The Reserve Bank of India (RBI) has lowered its consumer price inflation (CPI) forecast for FY27 to 5% from the 5.1% projected in June 2026, as per news report.  

The revision comes after inflation in the first quarter was lower than expected. According to the central bank, the recent increase in prices was mainly linked to food and fuel, while broader price pressures remained contained. 

Changes Across Quarters 

The RBI has cut its second-quarter inflation estimate to 4.7% from 5.1%. The projection for the third quarter remains unchanged at 5.9%, while the estimate for the fourth quarter has been raised slightly to 5.5% from 5.4%.  

Inflation for the first quarter was placed at 4.1%, compared with the earlier estimate of 4.2%. The central bank expects inflation to rise during the middle of the financial year before easing afterwards. 

Core Inflation Remains Stable 

The RBI has also revised its FY27 core inflation forecast to 4.3% from 4.7%. Governor Sanjay Malhotra said core inflation excluding precious metals continued to remain low. Core inflation, excluding food and fuel, stood at 3.9% in both May and June.  

The RBI said there was little evidence of price increases spreading across a wider range of goods and services. 

Monetary Policy Unchanged 

The Monetary Policy Committee kept the repo rate unchanged at 5.25% and retained its neutral policy stance. The standing deposit facility rate remains at 5%, while the marginal standing facility rate stays at 5.5%.  

Liquidity conditions continued to remain comfortable, with the liquidity adjustment facility recording an average daily surplus of around ₹1 lakh crore since the previous policy review. 

Growth Estimate Revised Higher 

The RBI raised its FY27 real GDP growth forecast to 6.7% from 6.6%. The first-quarter growth estimate was increased to 7% from 6.6%, while the projections for the third and fourth quarters were left unchanged at 6.5% and 6.8%, respectively.  

The central bank noted that domestic demand remained steady, and early corporate earnings pointed to better economic activity during the first quarter. 

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Conclusion 

The central bank has revised its inflation projections after lower-than-expected first-quarter inflation and maintained its policy rates. It continues to monitor domestic and external factors that could influence prices during the rest of FY27. 

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