Systematix Warns India Inflation May Reach 7 Percent

Systematix Institutional Equities released a report warning that inflation in India could reach 6-7% in the coming quarters, a projection significantly higher than current estimates from the Reserve Bank of India. The research firm argues the central bank is underestimating risks stemming from volatile international oil prices, rising input costs, and household inflation expectations, which averaged 9.1% in September 2026.

Systematix contends that the Reserve Bank of India's recent 25-basis-point repo rate hike to 5.50% is insufficient to manage these pressures. To restore a real interest rate of at least 1%, the report estimates the central bank may need to implement additional hikes of 100-150 basis points, potentially pushing the terminal repo rate to 6.5-7%.

The analysis further notes that pipeline inflation is likely to accelerate as government subsidies on energy and food wane. These combined factors of higher interest rates and rising input costs may simultaneously squeeze corporate earnings and weigh on equity valuations.