RBI expects inflation near 6% for the next 3 quarters

Economy No. 48 7 October 2026 · 3 min read

The RBI now expects prices to rise 5.2% on average in 2026-27. In August, it said 5.0%. A 0.2 point change may not be a big deal, but it is a different story quarter by quarter.

The first quarter of the year (Q1, April to June) came in at a quiet 3.9%. But the RBI has now raised its forecast for every quarter after that. For Q2 (July to September), it now expects 4.9%, up from 4.7% in August. For Q3, 6.0%, up from 5.9%. Q4: 5.7%, up from 5.5%. And Q1 of 2027-28, 5.6%, up from 5.3%.

Well, the RBI's job is to keep inflation around 4%, and 6% is the upper limit, so if inflation stays above 6% for 3 quarters in a row, it officially counts as a failure. And the RBI's own forecast for the next 3 quarters averages almost 5.8%. That's really cutting it close.

These are the things that led to this upward revision:

Food: sugar went up about 34% to ₹64/kg between early July and end-August, and onions about 85% between end-June and end-September.

Weather: the monsoon ended 13% below normal, and El Niño is making things worse.

Oil: the crude oil India buys averaged US$ 116.1 a barrel in September, against US$ 82.0 in July. The RBI now assumes US$ 95 for the rest of the year instead of US$ 85.

It's not just food and fuel anymore: core inflation, which leaves those 2 out, rose to 4.2% in August, from 3.9%. 37 out of every 100 rupees people spend now go on items whose prices are up over 4% in a year.

One bit of good news is that much of that core number is gold and silver. If you leave them out, the number was only 2.9% in August. And the RBI sees only small signs so far of companies raising their own prices to cover higher input costs.

Line chart of India's CPI inflation by quarter: actual 3.1% in January to March 2026 and 3.9% in April to June, then the RBI's August and October forecasts. October raised every quarter: 4.9%, 6.0%, 5.7% and 5.6% against 4.7%, 5.9%, 5.5% and 5.3%.

Sources