India: Inflation path higher into FY27 – Standard Chartered

Standard Chartered strategists have raised its FY27 Consumer Price Index (CPI) inflation forecast to 4.9% from 4.5%, citing higher food and retail fuel prices. They now expect broader price pressures, excluding Gold and Silver, with food and beverage CPI seen at 6.3%. Quarterly CPI projections for FY27 have also been revised higher on food-price risks.

Higher food and fuel lift CPI outlook

"We raise our FY27 CPI forecast to 4.9% from 4.5%, reflecting higher food and beverage inflation and higher fuel inflation; we remove our assumed c.2% retail fuel-price cut in September."

"Price pressures likely to rise across the board, barring gold and silver."

"Our quarterly CPI forecasts now stand at 4.8% (prev: 4.3%) for Q2-FY27, 5.8% (prev: 5.1%) for Q3-FY27 and 5.3% (prev: 4.9%) for Q4-FY27, driven by revisions to food prices."

"We expect MPC to maintain the status quo in FY27; risk of 50bps+ hike remains if food prices rise further."

"The revision to our FY27 core CPI forecast is marginal, however, as the upward pressure from removing our assumed September retail fuel-price cut has been partly offset by lower gold prices so far."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)