RBI Consults Public on Inflation Target Amid Food Price Volatility

The Reserve Bank of India is weighing whether to maintain its 4% inflation target as the framework faces review by April 2026. Public feedback centers on retaining the goal and reassessing the 2-percentage-point tolerance band.

Debate intensifies over targeting headline inflation versus Core metrics excluding volatile food and fuel prices. A government paper last year urged reevaluation after repeated food price shocks, though RBI policymakers signaled support for the status quo.

Central bankers warn that excluding food inflation risks overlooking household burdens. "Ignoring food costs WOULD neglect the poor's living expenses and welfare impacts," the consultation paper states. Most nations prioritize headline inflation across income brackets, with food and core prices typically converging over time.

The RBI defends its current framework as successfully balancing disinflation with shock absorption. The outcome could influence monetary policy flexibility in Asia's third-largest economy.