Economists Forecast 4.9% Inflation Rate for Coming Fiscal Year

Inflation Expectations Surge as Economists Forecast 4.9% Median Inflation in FY27

A recent poll of 14 economists by Moneycontrol has revealed that inflation is expected to more than double in FY27, as higher crude prices, food inflation risks, and geopolitical tensions weigh on the economy.

According to the poll, median consumer price inflation is expected to surge to 4.9 percent from around 2.1 percent in FY26, pushing it above the Reserve Bank of India's medium-term target of 4 percent. The rise in inflation expectations comes as economists increasingly warn that a prolonged West Asia conflict, elevated energy prices, and weather-related disruptions could fuel persistent price pressures through the year.

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Growth is expected to slow sharply, with the poll projecting GDP growth at 6.6 percent in FY27, down from an estimated 7.6 percent in FY26. This raises concerns about a combination of slower growth and rising inflation.

Several economists have flagged specific risks to inflation, including higher input prices, energy costs, and weakening INR, alongside geopolitical and El Niño-led supply shocks. Kotak Mahindra Bank chief economist Upasna Bhardwaj warned that inflation risks are building up from these factors.

Meanwhile, ICRA chief economist Aditi Nayar said that the agency now expects crude prices to average around $95 a barrel in FY27, compared with its earlier assumption of $85, due to continued tensions in West Asia. The agency projects FY27 inflation at 4.7 percent.

The recent hike in fuel prices by state-run oil-marketing companies by Rs 2.61, taking the total price hike to Rs 7.5 a litre, is also expected to contribute to rising inflation. Economists have also flagged weather-related risks to food prices, citing the possibility of El Niño conditions disrupting agricultural output and adding pressure on food inflation in the coming months.

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Despite the sharp upward revision in inflation expectations, most economists do not expect the Reserve Bank of India to raise rates in June. However, chances of a tighter monetary policy later in the year have gone up as inflation risks continue to build. Reserve Bank of India governor Sanja Malhotra said in an interview to Mint that the RBI will do "whatever is required" to ensure orderly movements in the foreign exchange market.