According to a report by the Reserve Bank of India (RBI) released in April 2026, inflation in India is projected to settle in the range of 5.2% to 5.5% for the fiscal year 2026-27 (FY27). The forecast takes into account potential risks from the El Niño weather phenomenon, which could impact agricultural output and food prices.
The RBI's Monetary Policy Committee (MPC) noted that while headline inflation has moderated, food inflation remains a key concern. The El Niño effect, characterized by warming of sea surface temperatures in the Pacific, often leads to below-average monsoon rains in India, affecting crop yields and pushing up food prices.
In its June 2026 policy review, the MPC kept the repo rate unchanged at 6.50%, emphasizing a cautious approach amid global uncertainties and domestic inflationary pressures. The central bank reiterated its commitment to aligning inflation with the 4% target over the medium term.
Economists suggest that the government may need to consider measures such as buffer stock releases and import duty adjustments to mitigate the impact of El Niño on food prices. The final inflation trajectory will depend on the intensity and duration of the weather event.
