RBI Raises Inflation Projection Marginally Due to Soaring Precious Metals Prices

• The Reserve Bank of India (RBI) has marginally increased its inflation projection for the current fiscal year to 2.1 percent.
• CPI-based inflation for Q1 and Q2 of 2026-27 is projected at 4 percent and 4.2 percent, respectively, up from previous estimates.
• The primary reason for the upward revision is the increase in prices of precious metals, contributing 60-70 basis points.
• Core inflation, excluding food and fuel, remained benign, with core inflation excluding gold stable at 2.6 percent in December.
• RBI Governor Sanjay Malhotra noted that the near-term food supply outlook is bright, but geopolitical uncertainty and energy price volatility pose upside risks.