SBI Research Projects India CPI to Reach 5.65% by September, Risking 6.5% Breach in Q4

SBI Research analysts project a significant acceleration in India's consumer price inflation over the next several months, forecasting that the Consumer Price Index (CPI) could reach 5.65% by September. The outlook further indicates that inflation may surpass the 6.5% threshold in both October and November.

The current transmission of price pressures has expanded beyond isolated sectors, with inflationary forces now affecting a broader range of commodity groups compared to the period surrounding the last monetary policy meeting. A secondary driver exacerbating this trend is the depreciation of the national currency, which mechanically increases the landed cost of imports and passes those higher expenses directly to end consumers.

Faced with this trajectory, the Reserve Bank of India (RBI) is expected to revise its macroeconomic baseline during its upcoming policy review. The central bank is anticipated to adjust its forecasts for both target inflation and GDP growth rates, changes that will likely inform subsequent decisions regarding interest rates and the broader cost of credit within the economy.