CRISIL: Consumer Inflation Likely to Rise from 2.5% in FY26 to 4.3% in FY27

New Delhi, February 19: According to a report by CRISIL, India’s consumer inflation is expected to rise to 4.3 percent in Financial Year 2027 (April 2026–March 2027), compared to an estimated 2.5 percent in the current financial year (FY26).

The report stated that retail inflation is likely to increase as food inflation normalizes from its current low levels, largely due to the low base effect.

“We expect retail inflation to rise from an estimated 2.5 percent in FY2026 to around 4.3 percent in FY2027,” the report noted.

Although a normal monsoon is anticipated in 2026—likely keeping food prices broadly stable—the base effect is expected to push food inflation higher in FY27 compared to FY26. However, the report emphasized that the revised Consumer Price Index (CPI) series, which assigns a lower weight to food items, will limit the overall rise in inflation.

Under the revised CPI series, the weight of food items has been reduced from 45.86 percent to 36.75 percent. This means the base-effect-driven increase in inflation will be relatively lower compared to the previous series.

The report also highlighted that non-food inflation is expected to help contain the overall rise in consumer inflation. Core CPI weight has increased from 47.3 percent to 57.89 percent, strengthening its influence on headline inflation.

During the first nine months of FY26, core inflation rose faster than headline inflation, primarily due to a sharp surge in gold and silver prices. However, due to the high base and expectations of softer global oil and commodity prices, core inflation is likely to moderate in FY27.

While food inflation is expected to drive headline consumer inflation higher in FY27, changes in the CPI basket are likely to keep the increase lower than previously anticipated. The revised CPI structure is also expected to reduce volatility in food inflation going forward.