The report notes that the forthcoming introduction of the new CPI series with a 2023-24 base year will be an important development to watch
Given the low base of the current financial year, the average consumer price index (CPI) inflation is expected to be higher at around 4.1 per cent in FY27, as per a report by CareEdge Ratings. The report stated that the forthcoming introduction of the new CPI series with a 2023-24 base year will be an important development to watch.
Food inflation to remain at moderate levels, supported by healthy agricultural activity, comfortable reservoir levels and a favourable base. With food inflation subdued, the report projected an average inflation rate of 2.1 per cent for FY26 and core inflation at 4.1 per cent.
“RBI revised its CPI inflation forecast for FY26 to 2.6 per cent in October, down from an earlier projection of 3.1 per cent. We expect the RBI to further revise down its inflation projections to around 2.1 per cent in the December policy meeting,” CareEdge Ratings pointed out.
The CPI inflation continued to stay on a downward trajectory, easing to 0.25 per cent in October 2025. The positive impact of the goods and services tax (GST) rationalisation and deflation in the food and beverages category supported the lower inflation print. Deflation in the food basket deepened further to 3.7 per cent in October, from 1.4 per cent the previous month.
The report added that within the food basket of CPI, deflation widened in items such as vegetables (-27.6 per cent YoY), pulses (-16.2 per cent), and spices (-3.3 per cent) in October. While inflation in edible oils witnessed some moderation, it continued to record double-digit inflation at 11.2 per cent, capping a further downside in overall food inflation, the report noted.
CareEdge Ratings highlighted that this trend remains a critical monitorable, particularly as global vegetable oil prices remain elevated. On the external front, global commodity prices are expected to remain broadly benign, given weak global growth prospects and overcapacity in China, it said.
