inflation forecast

India's retail inflation remains largely unaffected by West Asian conflict, with SBI retaining its FY27 forecast at 4.5%. While imported inflation eased slightly, rising food prices, particularly tomatoes, are a key driver. Future trends hinge on energy price pass-through and summer crop progress, with the RBI flagging upside risks.

Governor Malhotra Says Flexible Inflation Targeting May Not Be Enough Amid Crisis

The Indian rupee hit a new low against the US dollar, pressured by rising oil prices and external debt. Analysts link the decline to the US-Iran conflict, which has boosted crude oil costs and strained India's economy. While the RBI and government are intervening, markets anticipate potential interest rate hikes to stabilize the currency and manage inflation.

Asian Development Bank Chief Economist Albert Park forecasts elevated crude oil prices, averaging $96 per barrel in 2026 and $80 in 2027, due to prolonged Middle East tensions. This outlook suggests a 0.6% reduction in India's GDP growth for FY27, pushing inflation to 6.9% amid reliance on imported oil and gas.

Gold price prediction today: Gold and silver prices are rallying in the domestic market due to the sudden hike in import duties. In the coming days they are expected to align closer to the international prices, says Vedika Narvekar, Research Analyst - Commodities & Currencies, Anand Rathi Shares and Stock Brokers.

Oil prices dipped Wednesday after a three-day rally, with traders watching the Iran conflict's ceasefire and the Trump-Xi summit. Despite a slight fall, crude remains above $100 a barrel due to ongoing supply fears. Analysts predict elevated prices for months, impacting global inflation and potentially delaying US interest rate cuts.

Pakistan's economy faces sustained pressure with double-digit inflation likely to persist due to surging global oil prices amid the Middle East crisis. Rising energy costs and regional instability are projected to slow GDP growth and widen the current account deficit, impacting the stock market and currency.

Despite global economic headwinds from Middle East turmoil, India's economy is projected for stable growth through FY26 and FY27, with SBI forecasting around 7.5% for FY26. Resilient domestic demand, strong credit expansion, and broad-based improvements in high-frequency indicators support this optimistic outlook, though external vulnerabilities like oil prices and currency movements remain key concerns.

China's exports surged 14.1% in April, significantly exceeding expectations and bolstering the nation's economy despite global uncertainties. This strong performance precedes a crucial meeting between US and Chinese leaders, where trade tensions and other disputes are expected to be discussed. Analysts anticipate continued export-driven growth for China this year.

Gold price prediction today: Gold prices are expected to continue seeing volatility in the near-term, says Praveen Singh, Head Currencies and Commodities, Mirae Asset ShareKhan.

The India Meteorological Department has forecast the possibility of El Nino conditions during the South West monsoon season. Economists and experts note that a weak monsoon will add to the woes caused by higher crude oil prices, and fertilizer supply disruptions.

For RBI the situation is clear: The resilience of the global economy, already inflicted with trade tensions, is being tested by the conflict in West Asia. The biggest takeaway from the RBI bulletin is that India’s domestic supply chains may come under risk from a prolonged war scenario, though strong macroeconomic fundamentals provide a buffer.

India is experiencing extreme heatwaves, with temperatures soaring and heatwaves arriving earlier and with greater intensity. This is exacerbated by the El Niño phenomenon, which is expected to strengthen. The heat poses significant health risks and economic challenges, impacting daily life and livelihoods across the nation. Adaptation and mitigation strategies are crucial for navigating this growing crisis.

JPMorgan has shifted its stance on Indian equities to neutral, citing high valuations and geopolitical uncertainties. The brokerage warns of a potential 15% Nifty 50 decline in a worst-case scenario, impacting earnings due to energy supply risks. While the long-term outlook remains robust, near-term caution is advised, with other emerging markets potentially offering better opportunities.

Wall Street futures climbed Wednesday as President Trump extended the Iran ceasefire, easing immediate escalation fears. Despite Pakistani mediation, tensions remain with US naval blockades and Iranian ship seizures. Investors favor a negotiated peace over conflict. Strong corporate earnings, particularly from GE Vernova and Adobe, also boosted market sentiment, with Tesla and Southwest Airlines earnings awaited.

Moody's has revised India's FY27 growth forecast down to 6% due to weaker consumer demand and slower industrial output, exacerbated by rising energy costs from the West Asia conflict. Higher import bills and subsidy spending will strain government finances. While strategic reserves offer short-term relief, persistent high energy prices could widen the trade deficit and impact inflation.