India’s Economic Survey 2026, released Thursday, forecasts retail inflation to rise modestly in FY27 from FY26 levels but stay manageable. Current FY26 has seen dramatic easing, aligning with RBI’s 4% (±2%) tolerance band. December 2025 RBI estimates place FY26 CPI at 2%, with IMF at 2.8%, fueled by benign food prices.
Looking ahead, metal prices emerge as a key threat. Copper, aluminum, and steel costs are climbing due to booming infrastructure, green energy transitions, and data centers straining supply chains. This will inflate costs across manufacturing and construction sectors, feeding into broader inflation.
FY26’s low base was anchored by plunging food inflation from exceptional monsoons, full reservoirs, and record harvests. The survey cautions against expecting more declines; prices will revert to means, bolstering CPI. Fading base effects alone could lift FY27 readings significantly.
Gold and silver rallies, plus a weakening rupee, will exacerbate imported inflation. While government buffer strategies continue, food CPI is tipped to increase. The survey underscores the need for proactive measures to counter these dynamics, balancing growth with price stability in India’s evolving economy.