Overview
- Following a US–Iran peace development this week, global crude prices cooled and the near-term risk of oil-driven inflation eased.
- The Reserve Bank of India has raised its FY27 inflation forecast to 5.1% from 4.6%, citing higher uncertainty and price pressures.
- The India Meteorological Department downgraded the monsoon to about 90% of normal and reported rainfall through June 16 running roughly 28% below the long-term average.
- Economists say a weak monsoon and El Niño would tighten supplies of vegetables, pulses, milk and oilseeds while edible oils are especially exposed because India imports nearly half of its consumption and global edible-oil inflation ran near 28–29% in May.
- Higher food inflation would hit household budgets directly — one estimate puts extra monthly costs for a middle-income urban family at about Rs 1,000–3,000 — and could force the government to use buffer stocks, imports or export limits while the RBI holds off on policy easing unless prices cool.