Credit rating agency Crisil has upgraded its forecast for India's retail inflation to 5.1% for the fiscal year 2027, citing persistent headwinds from elevated fuel costs, rising input prices, and a weakening rupee.
The agency also highlighted weather-related risks to food prices as a key driver that could further strengthen inflationary pressures through the remainder of the current fiscal period.
The projection marks a notable shift in the inflation outlook, coming after June's consumer price index print came in at 4.4%.
Crisil's analysis suggests that the current trajectory leaves little room for monetary easing, with the agency explicitly noting scope for a 25 basis point rate hike by the Reserve Bank of India (RBI) if these pressures continue unabated.
This stance contrasts with earlier market expectations that had leaned toward a more accommodative policy environment.
The hardening inflation outlook adds complexity to the RBI's policy calculus.