Consumer price inflation in India is expected to rise to 5.65 per cent in September and cross 6.5 per cent in October and November before easing below 6 per cent in early 2027, according to SBI Research.
In its pre-Monetary Policy Committee (MPC) report released on Friday, SBI Research said the balance of risks has shifted towards a 25-basis-point repo rate hike by the Reserve Bank of India at its October 5-7 policy meeting.
The research house cited rising inflation, global macroeconomic risks, changing liquidity conditions, renewed repricing of risks in global markets and pressure on the rupee as key factors behind its expectation.
The RBI’s policy repo rate currently stands at 5.25 per cent. A 25-basis-point increase would mark a shift from the central bank’s previous stance.
At its August 3-5 meeting, the MPC unanimously kept the repo rate unchanged at 5.25 per cent and retained its neutral stance. The RBI had said it wanted greater clarity on the direction and composition of inflation before taking further policy action.
The central bank had projected FY27 GDP growth at 6.7 per cent and CPI inflation at 5 per cent.
More from BusinessInflation pressures broaden
SBI Research said inflationary pressures have strengthened since the August policy meeting. Retail inflation rose to 4.82 per cent in August from 4.45 per cent in July, with price pressures spreading across a wider range of items.
According to the report, 22 commodities accounted for 90 per cent of the weighted contribution to CPI inflation in January. By August, the number had increased to 51 commodities, indicating that inflationary pressures had become more broad-based.
Rupee, monsoon pose risks
The research house also highlighted weakness in the Indian rupee as a key risk to the inflation outlook.
It attributed the pressure on the currency to a strong US dollar, foreign currency demand from oil marketing companies and corporates, and continued selling by foreign portfolio investors.
SBI Research also flagged risks from the weak monsoon. The 2026 southwest monsoon stood at 87 per cent of the long-period average, while 43 per cent of districts received deficient rainfall.
It said strong El Niño conditions and below-normal rainfall in October could pose risks to Rabi crops, potentially adding to food inflation pressures.
SBI Research expects the RBI to raise its FY27 inflation projection by 20 basis points at the October policy review. It also expects the central bank to raise its FY27 GDP growth forecast by 30 basis points. The RBI’s October MPC meeting is scheduled for October 5-7.
