Inflation to stay within RBI’s tolerance band, says FM Sitharaman

Finance Minister Nirmala Sitharaman

Retail inflation is expected to remain within the Reserve Bank of India’s tolerance band, Finance Minister Nirmala Sitharaman said in an interview with Network18 Editor-in-Chief Rahul Joshi.

In the first interview after the presentation of the Budget for 2026-27, Sitharaman said, “inflation will remain within the tolerance band and won’t worry us as much.”

The RBI follows a 4 percent headline inflation target within a tolerance band of 2 percent to 6 percent.

Sitharaman’s comments come at a time when India’s consumer-price-index (CPI)-based inflation came in at 1.3 percent in December, below RBI’s 2-6 percent band for a fourth consecutive month.

Deflation in food prices persisted for seventh straight month, with the December reading at -2.71 percent.

The Reserve Bank of India expects inflation to average 2 percent for FY26 and 4 percent in the first half of FY27.

Starting February 12, the CPI series will shift to a new 2024 base, with an updated consumption basket that includes more items and assigns a higher weight to non-food components, which will also help contain food related volatility