RBI Sees Buoyant Economy Despite Monsoon and Oil Price Risks

2026-07-23 06:08 By Farida Husna 1 min. read

The Reserve Bank of India said the economy remained resilient despite growing risks from the war in Iran and a weak monsoon, according to its July 2026 State of the Economy report.

The central bank said domestic activity stayed expansive, supported by improving rural demand, firm urban consumption, and robust industrial and services sectors, while high-frequency indicators continued to point to solid momentum.

Headline consumer inflation edged higher in June due to food and fuel prices, although core inflation remained unchanged, while wholesale inflation also ticked up.

The report highlighted that elevated oil prices and an uneven monsoon, which has delayed the sowing of key crops, could weigh on the outlook.

Even so, it kept its forecast for the economy to grow 6.6% in the FY ending March 2027 and projected average inflation at 5.1%.

Governor Sanjay Malhotra said inflation pressures are "largely supply-side" and added that it is "premature to discuss monetary tightening."



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RBI Sees Buoyant Economy Despite Monsoon and Oil Price Risks
The Reserve Bank of India said the economy remained resilient despite growing risks from the war in Iran and a weak monsoon, according to its July 2026 State of the Economy report. The central bank said domestic activity stayed expansive, supported by improving rural demand, firm urban consumption, and robust industrial and services sectors, while high-frequency indicators continued to point to solid momentum. Headline consumer inflation edged higher in June due to food and fuel prices, although core inflation remained unchanged, while wholesale inflation also ticked up. The report highlighted that elevated oil prices and an uneven monsoon, which has delayed the sowing of key crops, could weigh on the outlook. Even so, it kept its forecast for the economy to grow 6.6% in the FY ending March 2027 and projected average inflation at 5.1%. Governor Sanjay Malhotra said inflation pressures are "largely supply-side" and added that it is "premature to discuss monetary tightening."
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