RBI MPC: RBI Revises FY 26 Inflation Forecast To 2.1%, GDP Projected To Grow At 6.9% in Q1FY27

RBI MPC: Reserve Bank of India (RBI) Governor Sanjay Malhotra led the Monetary Policy Committee, raising the GDP projection for the first quarter of the financial year 2026-27. The CPI inflation for 2025-26 is projected at 2.1%.

Meanwhile, the Gross Domestic Product (GDP) is estimated to grow at 7.4% in the year 2025-26. On the supply side, real GVA growth of 7.3% will be driven by buoyant services sector, resilient agricultural sector and revival in manufacturing activity.

The RBI's announcement has come at a time after India's retail inflation jumped to a three-month high of 1.33 per cent in December 2025, as per the data released by the National Statistics Office.

In the Union Budget 2026, the government had estimated a nominal Gross Domestic Production (GDP) growth rate of 10% in the year 2026-27 (including real growth and inflation).

RBI Inflation Projections Announced In December

In December, the RBI's MPC had reduced core and retail inflation projections, but upgraded the country's growth outlook amid improving macroeconomic conditions. The consumer price index (CPI) inflation estimates for Financial Year 2026-26 (FY 26) were trimmed to 2% from 2.6%, whereas the GDP growth forecast was increased to 7.3% for the same duration.

The inflation rate, measured by the Consumer Price Index (CPI), had stood at 0.71 per cent in November, indicating a noticeable acceleration during the month. The last time retail inflation was higher was in September 2025, when it touched 1.44 per cent.

India's Retail Inflation

India's retail inflation edged up to a three-month high of 1.33 per cent in December 2025, driven largely by higher prices of kitchen essentials such as vegetables and protein-rich items, official data released on Monday showed.

Despite the rise in headline inflation, food inflation remained in negative territory for the seventh consecutive month, reflecting continued softness in overall food prices. Food inflation stood at -2.71 per cent in December, although it moderated from -3.91 per cent in November, suggesting a gradual firming up in prices of select food items.

In December, the RBI had announced a 25 basis points cut to reduce the repo rate to 5.25%. The December repo rate cut was announced citing the need to support economic growth amid global uncertainties. The RBI had announced an overall 125 bps repo rate cut in the year 2025.