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India's Q4 FY26 Inflation Seen at 3%, Below RBI's Forecast: UBI

A Union Bank of India report projects Consumer Price Index inflation for Q4 FY26 at 3%, slightly lower than the Reserve Bank of India's estimate of 3.2%. The revision follows the government's official shift of the CPI base year from 2012 to 2024. Despite February 2026 inflation hitting an 11-month high of 3.21%, it remains within the RBI's comfort zone. The report notes a surprising rise in food inflation to 3.35% in February, even as vegetable prices fell sharply.

Key Points: Q4 FY26 Inflation Projected at 3%, Lower Than RBI Estimate

  • Q4 FY26 inflation seen at 3%
  • Below RBI's 3.2% projection
  • CPI base year shifted to 2024
  • Food inflation rose unexpectedly in Feb
2 min read

Consumer inflation for Q4FY26 likely to come at 3% lower than RBI estimate: UBI Report

Union Bank of India report projects 3% CPI inflation for Q4 FY26, under RBI's 3.2% forecast, amid base year revision and rising food prices.

"Our CPI projection for Q4FY26 is now tracking 3 per cent, slightly lower than RBI's projection of 3.2 per cent - UBI Report"

New Delhi, March 13

The consumer inflation for the fourth quarter of the current financial year FY26, is expected to come in at 3 per cent, slightly lower than the Reserve Bank of India's projection of 3.2 per cent, according to a report by Union Bank of India.

The report noted that the bank's internal projections suggest inflation will remain lower than the central bank's estimates in the coming quarters as well.

"Our CPI projection for Q4FY26 is now tracking 3 per cent, slightly lower than RBI's projection of 3.2 per cent," the report said.

However, the report added that the Monetary Policy Committee (MPC) is expected to revise its inflation outlook in the upcoming April policy meeting.

The revision in projections follows the Ministry of Statistics and Programme Implementation's (MoSPI) decision to change the base year used for inflation calculation. The ministry has officially shifted the base year for the Consumer Price Index (CPI) from 2012 to 2024.

Meanwhile, the latest inflation data shows that CPI inflation in February 2026 rose compared to the previous month.

According to the report, Consumer Price Index (CPI) inflation in February 2026 accelerated the upward trend and printed at 3.21 per cent compared with 2.74 per cent in January.

Although the headline inflation touched an 11-month high, it remained well within the central bank's comfort range.

Food inflation also saw a noticeable increase during the month. The report noted that food inflation stood at 3.35 per cent in February, which was higher than the bank's projection of 2.55 per cent.

Food inflation also rose sharply during the month, increasing by 123 basis points. The report said the rise came as a surprise because vegetable prices actually declined significantly during the period.

"This was a surprise element as the veggies were actually down during the month by more than 14% MoM," the report added.

Looking ahead, the report expects food inflation to remain largely muted in FY26, supported by a high base effect. However, it cautioned that inflation in March could see some upward pressure.

"We expect food inflation to remain largely muted in FY26, supported by a high base even though March can see the print on higher side as the summer heat kicks in amidst supply side apprehensions in an era of war and uncertainties," the report said.

- ANI

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Reader Comments

S
Sarah B
Interesting analysis. The change in base year from 2012 to 2024 is a significant methodological update. It should provide a more accurate picture of current consumption patterns. However, it makes historical comparisons tricky for a while.
P
Priyanka N
Food inflation at 3.35% when veggies were down 14%? Something doesn't add up. Must be pulses, oils, or other staples driving it up. The report's caution about summer heat and supply issues is valid. We need better supply chain management. 🍅🥦
A
Aman W
Lower inflation is always welcome news! This should give RBI more room to support growth. Maybe we can hope for a more growth-oriented policy in the next MPC meeting if the trend holds. Good for the economy overall.
K
Karthik V
Respectfully, while the headline number is within the comfort zone, the month-on-month jump from 2.74% to 3.21% is quite sharp. We should not become complacent. The "surprise element" in food inflation shows forecasting models might be missing ground realities.
M
Meera T
As a small business owner, stable and predictable inflation is key for planning. Glad it's under control. The base year change was long overdue—2012 consumption basket is ancient history now. Hope this leads to better policy decisions.

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