El Niño, Uneven Monsoons May Push India's Food Inflation Higher In FY27, Keeping RBI Open To Another Interest Rate Hike
New Delhi: Uneven monsoons and the possibility of El Niño conditions could pose upside risks to food inflation in FY27, keeping the Reserve Bank of India (RBI) open to another interest rate hike despite expectations of gradual moderation in overall price pressures, according to a report by Nuvama Institutional Equities. The report said headline inflation could remain elevated in the near term due…
Uneven monsoons and the possibility of El Niño conditions could potentially increase food inflation in India during fiscal year 2027, according to a report by Nuvama Institutional Equities. The RBI, which is monitoring overall price pressures, remains open to another interest rate hike despite the expectation of gradual moderation in inflation, the report stated.
While headline inflation may remain elevated in the short term due to an unfavorable base effect, it is expected to normalize gradually during 2027 as base effects fade and supply-side pressures ease, the report indicated. Currently, India's headline Consumer Price Index (CPI) inflation reached a two-year high of 6.1% year-on-year in October, with food and beverages inflation at 8.5%.
El Niño and uneven monsoon conditions could maintain upward pressure on food inflation, influencing the RBI's future monetary policy decisions.
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