Oxford Economics argues November is the "last realistic window" to adjust pump prices before campaigning ramps up for early-2027 state polls. In a Thursday note, lead economist Alexandra Hermann Prasad pointed out that five of the seven states going to the polls next year, including Uttar Pradesh and Punjab, are slated to vote between March and May.
The potential increase would be modest, roughly half the cumulative 7.5% rise implemented in May. That month was the only stretch when retailers lifted pump prices because of the conflict in the Middle East.
If fuel prices move in November, Oxford Economics estimates headline inflation could hover around 6.2% in the October to December quarter, above the Reserve Bank of India's 2% to 6% tolerance band. It also sees inflation at about 6.5% in the first quarter of 2027, a trajectory that diverges from the RBI's latest guidance.
Earlier this month, the RBI projected 6% inflation for October to December, easing to 5.7% in January to March. For the year ending in March, Hermann Prasad expects 5.4%, compared with the RBI's 5.2% forecast.
In September, consumer prices climbed 5.54%, the most since late 2024, versus 4.83% in August. Hermann Prasad added that skipping a November fuel hike would trim her projections by 10 to 30 basis points over the next few quarters, though "inflation would remain elevated."
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With price pressures still firm, she said the backdrop may call for two 25-basis-point RBI hikes at its December and February meetings, following October's quarter-point move. On the currency front, she noted the RBI's recent actions can help steady the rupee, "but elevated oil prices and persistent external financing pressures mean intervention alone is unlikely to deliver lasting currency stability."
She also said wider protests over alleged electoral malpractice are unlikely to materially dent growth, as the "disruption has largely centered on Delhi and remains too limited."
A referenced chart showed India's crude imports climbing, with Russian supply helping India pay less while buying more in FY 2025-26. It also noted India's fiscal year runs April to March, and that FY27 figures covered only April to August, citing the Petroleum Ministry.
Fuel touches everything from cab fares to grocery shelves, so even a small rise can keep inflation sticky while the RBI tries to cool it. If the outcome looks closer to Oxford Economics' view than the RBI's, borrowing costs could stay higher for longer, which shapes how quickly mortgages, car loans, and small-business financing get cheaper.
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