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RBI may deliver another 25 bps rate punch in December despite moderating food prices

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RBI may deliver another 25 bps rate punch in December despite moderating food prices

RBI may deliver another 25 bps rate punch in December despite moderating food prices

Vegetable price momentum has eased significantly and sugar prices are correcting, while price pressures in other key food categories remain broadly under control. However, the delayed pass through of higher input costs is expected to sustain underlying inflationary pressures.

Nomura expects the RBI to raise the repo rate by another 25 basis points to 5.75 per cent in December, followed by a pause through 2027. Core inflation rose to 4.3 per cent in September, while super core inflation increased to 3.2 per cent from 2.9 per cent in August. The share of CPI components with inflation above 4 per cent rose to 45.6 per cent in September from 36.8 per cent in August, signalling broader price pressures. Currency defence could influence the RBI's policy decisions, keeping the February 2027 meeting open to further action despite Nomura's baseline expectation of a pause.

75 per cent, despite easing food price pressures, as core inflation momentum strengthens and price increases spread across more components of the consumer price index (CPI). The hike would be followed by a pause through 2027, although currency pressures could keep the February policy meeting open to further action. Vegetable price momentum has eased significantly and sugar prices are correcting, while price pressures in other key food categories remain broadly under control. However, the delayed pass through of higher input costs is expected to sustain underlying inflationary pressures, according to Nomura.



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