India prioritises price stability as inflation risks loom in second half

The finance ministry's mid-year review has underscored price stability as a central focus for the second half of FY27, as several inflationary pressures continue to weigh on the economy. Officials have flagged a combination of external and domestic factors that pose risks to achieving the government's inflation management objectives.

Crude oil prices remain elevated, creating upward pressure on domestic fuel costs and transportation expenses across the economy. Food inflation, driven partly by weather-dependent factors, has emerged as another critical concern for policymakers seeking to keep consumer price increases in check.

The kharif harvest cycle presents an additional variable that could influence food price trends over the coming months. Uncertainty around this year's crop output adds to the complexity of the inflation outlook, according to the ministry's assessment.

Despite these headwinds, the government has maintained a growth projection of 7.35% for the second quarter of the financial year, indicating confidence in the underlying strength of economic activity. The twin focus on managing both growth and inflation reflects the delicate balancing act facing policymakers as they navigate competing economic priorities in the months ahead.