MUMBAI: The continuing fall of the rupee—which breached the 92-mark for the first time Thursday in early morning trade-- could pave the way for the imported inflation, the Economic Survey has warned even as it notes that barring precious metals, global commodity prices are expected to remain soft, limiting the impact.
The rupee, which has been sliding for the past for almost a year now and lost 4.9% in 2025 becoming the worst Asian currency and the third worst globally, hit a new low of 92.0163 against the dollar in the morning ahead of the release of the survey. Yesterday unit had touched 91.99 for the second time.
The pressure on the rupee mounted after the US imposed 50% tariffs on India from August. Another reason is the dumping of equities by the foreign investors, who had taken away $19 billion from the market in 2025 alone and another $4 billion so far this year is another reason for the pain. Yest another reason is the continuing delay in sewing up trade deal with the US. The recent rally in the Japanese bond yields also adding to the pressure.
The survey said sees the retail inflation, headline and core, excluding precious metals, averaging at 4% in FY27 against 2% in Fy26.
In December, the RBI revised down its inflation projections for FY26 from 2.6% to 2%, after the prices index fell to 063% in Q2, and also due to a good kharif harvest and healthy rabi sowing. The IMF has projected an inflation rate of 2.8% in FY26 and 4% in FY27, the survey said.
The RBI’s forecast for headline inflation for Q1 and Q2 of FY27 currently stands at 3.9% 4%, survey added.
After hitting 0.25% inflation firmed up in December rising to a three-month high of 1.33% from 0.7 percent in November.
Even with the uptick, headline inflation has now stayed below the RBI’s lower tolerance threshold of 2% for four consecutive months, underlining how price pressures have cooled meaningfully since the middle of the year.