New Delhi [India], June 13 (ANI): India's retail inflation is expected to rise after December this year and average around 4.5 per cent in the next financial year (FY27), according to a new report by ICICI Bank.

The report highlighted that despite a near-term increase in vegetable prices during the monsoon months, overall inflation will likely remain under control until the end of 2025, helped by a high base and better food output.

It said 'CPI inflation is seen remaining below 4 per cent until end-Dec, after which it is seen rising because of a low base and perhaps a negative supply impulse'.

The report also revised its inflation projection for the current financial year (FY26) to 3.3 per cent, lower than its earlier estimate of 3.6 per cent.

This is also below the Reserve Bank of India's (RBI) forecast of 3.7 per cent. The downward revision has been made in light of softening food inflation trends, supported by expectations of a normal monsoon and higher agricultural output.

The report also shared that the inflation is expected to stay below 4 per cent till the end of December 2025. However, it could pick up sharply after that, driven by a low base effect and possible negative supply factors.

As a result, the bank has increased its inflation forecast for the fourth quarter of FY26. The report further notes that the first three quarters of FY26 are likely to witness lower inflation compared to previous estimates.

Looking ahead, ICICI Bank expects inflation to rise in the first half of FY27, mainly due to an unfavourable base. This will result in the full-year average inflation for FY27 climbing to around 4.5 per cent, in line with the RBI's projection.

In May 2025, India's retail inflation dropped to a 75-month low of 2.82 per cent, down from 3.16 per cent in April.

This figure was also lower than ICICI Bank's and market expectations of 3.0 per cent. The fall was largely driven by lower food inflation, while fuel inflation remained steady and core inflation saw a slight increase.

Overall, while inflation remains under control for now, experts expect price pressures to return in the next fiscal year. (ANI)