RBI Revises Inflation Outlook Upwards for FY26 and Early FY27 on Precious Metal Prices

Inflation Projections See Modest Increase​

The Reserve Bank of India has revised its inflation projections upward for the current financial year and the first half of the next fiscal, citing a rise in prices of precious metals as the primary driver.

For 2025–26, the central bank now projects inflation at 2.1 percent, higher than its earlier estimate of 2 percent made in December. Looking ahead, consumer price index based inflation is projected at 4 percent for the first quarter of 2026–27 and 4.2 percent for the second quarter of the same fiscal year.

Recent Inflation Trends Remain Subdued​

Headline CPI inflation remained low in recent months, standing at 0.7 percent in November and 1.3 percent in December 2025. Food prices continued to be in deflation, while fuel inflation stayed moderate during this period.

Core inflation, which excludes food and fuel, also remained benign despite a rise in precious metal prices. Excluding gold, core inflation was stable at 2.6 percent in December.

RBI Governor Flags Precious Metals Impact​

Unveiling the bi monthly monetary policy, RBI Governor Sanjay Malhotra said the revised inflation outlook for the first two quarters of 2026–27 remains benign and close to the central bank’s target.

He noted that the slight upward revision is largely attributable to higher prices of precious metals, which are estimated to contribute around 60 to 70 basis points to inflation. According to the governor, underlying inflation pressures continue to remain low.

Food Supply Outlook and Inflation Risks​

The near term outlook for food inflation remains favourable, supported by healthy kharif output, adequate buffer stocks of foodgrains, encouraging rabi sowing progress, and sufficient reservoir levels.

However, the RBI highlighted that geopolitical uncertainty, volatility in global energy prices, and adverse weather events pose upside risks to the inflation trajectory. Core inflation, excluding potential volatility from precious metals, is expected to remain range bound.

CPI Series Update and Future Projections​

With the release of the new CPI series with base year 2024 set for February 12, the central bank said it will provide inflation projections for the full financial year 2026–27 in its April 2026 monetary policy statement.