Uneven Monsoons and El Niño Could Keep RBI Rate Hike Possible

Uneven monsoons and possible El Niño conditions could increase food-inflation risks in FY27, keeping the Reserve Bank of India open to another interest rate hike, according to a Nuvama Institutional Equities report. The report expects overall price pressures to gradually moderate as base effects fade and supply-side pressures ease, but says persistent inflation risks could prompt further monetary tightening. India’s headline CPI inflation rose to 6.1% in October from 5.5% in September, a two-year high. Food and beverages inflation climbed to 8.5% from 7.4%, with food prices and base effects driving the increase.