The ongoing bombings between Iran and Israel could reach India as well. A recent ICICI Bank report on inflation has drawn everyone's attention...

New threat to inflation...

India Inflation Forecast: The ongoing bombings between Iran and Israel could reach India as well. A recent report from ICICI Bank on inflation has drawn attention.

According to the report, due to rising energy prices, the country's retail inflation rate is expected to reach 4.5 percent in the financial year 2027. This could lead to higher prices for everyday goods and services. Let's learn more about this report...

What does the report say?

Regarding inflation, the bank has revised its Consumer Price Index (CPI) forecast from its previous 3.9 percent. Rising petrol and diesel prices are being cited as a major reason for this. Rising oil prices impact other sectors as well. According to the report, the forecast has been revised based on current inflation trends.

However, the report also predicts that inflation in India will remain under control in fiscal year 2026. Previously, the CPI was projected to be 2.1 percent. However, this has been revised in the new series.

The mathematics of inflation changed in the new series

Following the change in the method of measuring inflation, the consumer basket has also changed. In the new series, the share of food items has been reduced to 36.8 percent, a decrease of approximately 9.1 percent from the previous period. In contrast, the weightage of petrol, diesel, and LPG has been increased, making the impact of fuel prices more clearly visible.

According to the bank's estimates, every $10 per barrel increase in crude oil prices could directly impact the CPI by 40-45 basis points and overall by 50-60 basis points. This means that fluctuations in oil prices will now have a greater impact on inflation than before.

Reserve Bank of India estimates

The RBI has also revised its inflation forecast. At the February monetary policy meeting, the CPI inflation figures for the fiscal year 2027 were revised.

According to the new estimates, inflation is expected to be around 4 percent in the first quarter of FY27 and 4.2 percent in the second quarter, which is slightly higher than the earlier estimates.