Rating agency projects rise from estimated 2.5 per cent in FY26, citing base effect and normalisation in food prices
India’s consumer price inflation is projected to climb to 4.3 per cent in the financial year 2026-27, compared with an estimated 2.5 per cent in 2025–26, according to a recent assessment by Crisil. The forecast indicates a shift from the relatively subdued price environment seen this year to a more typical inflationary pattern next year.
The projection relates to the fiscal year beginning in April 2026 and ending in March 2027. Analysts at the rating agency indicate that the anticipated rise is not driven by a sudden surge in demand or supply shocks, but rather by a statistical effect linked to the current year’s unusually low inflation base. When inflation remains muted for an extended period, even moderate price increases in the following year can appear more pronounced in comparison.
Food prices are expected to play a central role in the upward movement. During FY26, favourable agricultural output and stable supply conditions helped keep food inflation contained. However, as these effects normalise, food prices may register firmer growth. Although the increase is not forecast to be extreme, it will contribute significantly to overall inflation given the prominence of food in household expenditure.
At the same time, adjustments to the Consumer Price Index basket are likely to influence the outcome. With a recalibrated weighting structure that slightly lowers the proportion assigned to food items, the overall impact of rising food prices could be moderated. Non-food components such as housing, transport, and services are expected to exert steady but manageable pressure on prices.
Global commodity trends will also shape domestic inflation dynamics. Stable crude oil prices and easing volatility in international markets could help prevent sharp increases in fuel and imported goods costs. This may limit the extent to which broader inflation accelerates.
For policymakers at the Reserve Bank of India, the projected 4.3 per cent rate remains within the medium-term target band. As a result, monetary authorities may have room to maintain a balanced stance, monitoring developments without immediate drastic intervention.
Overall, the outlook suggests a return to moderate inflation levels rather than a period of excessive price instability, reflecting evolving base effects and steady economic conditions.
