DBS forecasts a jump in India's September inflation to 5.7% due to food and fuel costs, signaling that the RBI may keep a December 2026 rate hike as a viable policy option to stabilize the rupee.
The Indian Rupee faces pressure from rising inflation, which is expected to climb to 5.7% due to food and fuel costs. To combat this, DBS anticipates the Reserve Bank of India (RBI) will maintain a hawkish stance, keeping the possibility of a rate hike in December 2026 open to support the currency.
DBS expects the RBI to keep the door open for a potential rate hike in December 2026 in response to rising inflation.
Elevated oil prices are identified as a primary contributor to rising non-food fuel costs in India, which in turn exacerbates inflationary pressures. The article highlights these costs as a key factor driving the projected increase in India's September inflation to 5.7%.
Higher oil prices are increasing non-food fuel costs, which is a significant driver of the projected rise in India's year-on-year inflation.
DBS Group Research projects India's September inflation to climb to 5.7% year-on-year, up from 4.8%, fueled by rising food costs and elevated global oil prices. The anticipated inflationary pressure prompts analysts to suggest the Reserve Bank of India may maintain a hawkish stance, keeping a potential rate hike on the table for December 2026.
Inflation is projected to climb to 5.7% due to broad-based food price gains, higher non-food fuel costs, and the impact of uneven monsoon conditions.
DBS Group Research expects the RBI to keep the door open for a potential rate hike in December 2026 to counter persistent inflationary pressures.