SBI forecasts India inflation spike

SBI Research released a report forecasting that India's retail inflation will rise to 4.7% in August 2026 from 4.45% in July, briefly breach 6% in October and November, and then ease to around 5% in Q4 FY27. The report attributes the near-term rise to food price pressures, but expects improving food supply conditions, a recovered monsoon, and resilient kharif sowing to contain inflation later. It also notes that a positive Indian Ocean Dipole could offset El Nino effects. RBI Governor Sanjay Malhotra indicated the central bank needs greater clarity on the inflation trajectory before recalibrating policy rates, as reflected in the latest Monetary Policy Committee minutes. SBI Research flagged concerns about central bank communication, suggesting recent policy actions like variable rate reverse repo operations and the FCNR(B) deposit window carry more weight than forward guidance. The report also highlighted US United States — Federal Reserve measures to smooth the long end of the Treasury yield curve, including increased government debt repurchases, which could have global market implications.