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India's Inflation to Rise to 4.3% in FY27, Says Crisil Report

A Crisil report forecasts India's consumer inflation will increase to 4.3% in the financial year 2027, up from an estimated 2.5% in FY26. This rise is primarily attributed to food inflation normalizing from current low levels due to a base effect. However, the revised Consumer Price Index series, which reduces the weight of food, will limit the extent of the overall inflation increase. The report also suggests this outlook allows the Reserve Bank of India to maintain its current pause on the repo rate.

Key Points: India's Inflation Forecast: 4.3% in FY27 from 2.5% in FY26

  • Inflation rise driven by food price normalization
  • New CPI series reduces food weight to 36.75%
  • Core inflation to remain moderate in FY27
  • RBI likely to maintain repo rate pause
2 min read

Consumer inflation likely to rise to 4.3 per cent in FY27 from 2.5 per cent in FY26: Crisil

Crisil projects India's consumer inflation to rise to 4.3% in FY27 from 2.5% in FY26, driven by food prices and base effects, with new CPI weights limiting the increase.

"We expect retail inflation to rise to around 4.3 per cent in fiscal 2027 from an estimated 2.5 per cent in fiscal 2026 - Crisil Report"

New Delhi, February 19

Consumer inflation in India is expected to rise to 4.3 per cent in the financial year 2027, compared with an estimated 2.5 per cent in the current financial year, according to a report by Crisil.

The report stated that retail inflation is expected to rise due to food inflation normalising from the current low levels, mainly because of a low base effect.

It said "We expect retail inflation to rise to around 4.3 per cent in fiscal 2027 from an estimated 2.5 per cent in fiscal 2026".

While food prices are anticipated to remain broadly benign, supported by the assumption of a normal monsoon in 2026, the base effect will push food inflation higher than fiscal 2026.

However, the report noted that the reduced weight of food in the new Consumer Price Index (CPI) series will limit the extent of this increase.

The weight of food in the revised CPI series has declined to 36.75 per cent from 45.86 per cent earlier, which implies that the base-effect-led increase in inflation will be smaller compared to the earlier series.

The report also highlighted that non-food inflation is expected to help restrain the overall rise in consumer inflation.

The report further noted that core inflation is expected to cap the upside in consumer inflation. The weight of the core CPI index has increased to 57.89 per cent from 47.3 per cent, strengthening its influence on headline inflation.

In the first nine months of fiscal 2026, core inflation rose faster than the headline inflation rate, driven by a sharp spike in gold and silver inflation. However, due to this high base and expectations of benign global oil and commodity prices, core inflation is likely to remain moderate in fiscal 2027.

Food inflation is expected to push up headline consumer inflation in fiscal 2027, but less than earlier expectations due to changes in the CPI basket.

The lower weight of food in the revised series means that the rise in inflation will be more limited compared to the previous index.

The report also noted that food inflation volatility may decline under the revised CPI structure.

According to Crisil, this inflation outlook would allow the Reserve Bank of India's Monetary Policy Committee to maintain its pause on the repo rate and focus on the transmission of the 125 basis points rate cut carried out in calendar year 2025.

- ANI

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Reader Comments

P
Priya S
The report is quite technical but the key takeaway is that the RBI might keep rates on hold. Good for home loan EMIs! The change in CPI weights seems like a smart move to reduce volatility from food prices. Fingers crossed for a normal monsoon in 2026.
R
Rahul R
While the analysis is detailed, I respectfully disagree with the optimistic tone. A rise from 2.5% to 4.3% is significant. For salaried people, our increments rarely match inflation. The "low base effect" explanation doesn't make groceries cheaper for my family.
A
Anjali F
Food weight reduced in CPI? That's interesting. Means inflation numbers might look more stable, but will our kitchen bills actually reflect that? At the end of the day, tomato prices hitting ₹100/kg hurts more than any index change. Hope the forecast holds.
D
David E
Working in India for 3 years now. The focus on core inflation (nearly 58% weight) aligning with global practices is a positive step. It should lead to more predictable monetary policy. Stability is good for foreign investment and long-term growth.
K
Kavya N
Everything depends on the monsoon! Our economy is still so connected to agriculture. If 2026 has good rains, maybe the price rise won't pinch too much. Government should also strengthen supply chains to prevent wastage and price spikes. 🚜

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