India is moving out of a phase of unusually low inflation, but without slipping into a high-price environment, the Reserve Bank of India (RBI) said in its latest policy assessment. The central bank expects inflation to gradually return to levels that are considered healthy for a growing economy, settling close to 4% in FY2026–27.
RBI Governor Sanjay Malhotra said the upward shift in inflation projections reflects stronger economic activity and improving demand rather than structural price stress. For the current financial year, inflation is expected to average around 2.1%, rising modestly to about 3.2% toward the year’s end as consumption picks up.
According to RBI estimates, inflation in the first half of the next financial year is likely to hover near the central bank’s target level, at about 4.0% in the April–June quarter and 4.2% in the July–September quarter. The RBI noted that food prices, global commodity movements, and domestic demand trends are key factors behind this gradual increase.
With inflation projected to remain well within the policy comfort zone of 2% to 6%, the Monetary Policy Committee decided to keep the repo rate unchanged at 5.25% and maintain a neutral policy stance. The RBI said this approach allows it to nurture growth while staying prepared to respond if price pressures rise unexpectedly.
For households, the RBI’s outlook suggests that the cost of living is likely to rise at a measured pace, making household budgets easier to manage. For businesses, stable inflation and steady interest rates offer a predictable environment for investment decisions, expansion plans, and job creation.
The central bank also underlined that it is closely tracking global risks, including oil prices, precious metals, and geopolitical developments, which could influence inflation trends in the months ahead.
Also Read: PM Modi speaks during Rajya Sabha walkout
