Stories
RBI Faces Pressure to Launch 75-BPS Rate Hike Cycle Amid Rising Inflation
N
News18•07-10-2026, 10:15
RBI Faces Pressure to Launch 75-BPS Rate Hike Cycle Amid Rising Inflation
- •A Union Bank of India research report suggests the RBI may initiate a cumulative 75 basis point rate hike cycle due to broadening inflation pressures.
- •Retail inflation is projected to stay above 6 per cent throughout the second half of FY27, driven by persistent supply shocks and rising energy costs.
- •Food inflation is expected to exceed 7 per cent in FY27, fueled by pressures in cereals, pulses, sugar, and edible oils along with a monsoon rainfall deficit.
- •Commodity costs accounted for roughly 55 per cent of the rise in headline inflation between January and August, according to the report.
- •Core inflation is projected to rise to 4.3 per cent for FY27 as higher input costs pass into consumer prices amid resilient domestic demand.
Key Questions Answered
According to a Union Bank of India research report, retail inflation is expected to remain above 6 per cent throughout the second half of FY27 due to prolonged supply shocks and broad-based price pressures.
Food prices are driven by persistent pressures in cereals, pulses, sugar, and edible oils, compounded by a 13 per cent monsoon rainfall deficit and lower reservoir levels that threaten the upcoming rabi crop.
Commodity prices accounted for approximately 55 per cent, or 116 basis points, of the 209 basis point increase in headline CPI between January 2026 and August 2026.
