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ICICI Bank sees food inflation staying high in India, RBI may hike in December

ICICI Bank analysts expect food inflation in India to stay elevated, and the Reserve Bank may raise its rate by 25 bps in December, according to Moody's.

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what happened

ICICI Bank expects food inflation in India to remain high over the coming months. According to a report cited by Moody's, the outlook depends heavily on the upcoming rabi harvest, since the monsoon season delivered a rainfall shortfall. Lower reservoir levels and soil moisture could cut crop output and add further upward pressure on food prices.

Retail inflation accelerated to 6.08% year on year in October, breaching the upper bound of the RBI's tolerance band for the first time in two years. It stood at 5.54% in September. Food inflation rose to 8.9% from 7.7%, while core inflation was 4.5%. Price pressure is also broadening: about 53% of the weighted CPI basket is now showing inflation above 4%, up from 20% in March 2026.

ICICI Bank raised its CPI forecast to 5.2% for FY27 from 5.1%, and to 5.0% for FY28 from 4.9%. It expects the RBI to lift rates by 25 bps in December and February. The return of foreign portfolio inflows and easing oil prices could still shape the Monetary Policy Committee's decision.

why it matters

For markets, the report signals that India may keep monetary policy tight for longer than previously assumed. Expectations of higher rates typically weigh on government bond yields and influence the rupee. Still, steady foreign capital inflows and lower oil prices could partly offset that pressure. The RBI committee's decision will be the key reference point for investors.

tags

EconomyMonetary PolicyInflation

instruments

Indian government bondsUSD/INRNifty 50

sources

  1. Food inflation to remain high for next few months, RBI may raise 25 bps in Dec: ICICI Bank — Moody's, 13 November 2026 at 04:49 UTC
  2. Food inflation to remain high for next few months, RBI may raise 25 bps in Dec: ICICI Bank — Moody's, 13 November 2026 at 06:53 UTC

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