Oxford Economics said India may raise retail fuel prices moderately in November, creating a limited window for the move before campaigning intensifies for state elections scheduled early next year. The potential increase could be around half of the cumulative 7.5 per cent rise implemented in May, the only period when retail pump prices increased in response to the war in the Middle East.

Alexandra Hermann Prasad, lead economist at Oxford Economics, said November was the last realistic opportunity for a fuel-price increase before campaigning gathered pace. Five of the seven states scheduled to hold elections next year, including Uttar Pradesh and Punjab, are due to vote between March and May. A price increase could push India’s retail inflation to 6.2 per cent in the October-December quarter and 6.5 per cent in the first three months of 2027, above the Reserve Bank of India’s target range of 2 to 6 per cent.

Oxford Economics’ projections are higher than the central bank’s latest estimates. The RBI projected inflation at 6 per cent in the October-December quarter, easing to 5.7 per cent in January-March, while Oxford Economics forecast full-year inflation of 5.4 per cent for the financial year ending March 2027, compared with the RBI’s 5.2 per cent estimate. If the authorities do not raise fuel prices in November, Oxford Economics expects its inflation projections to fall by 10 to 30 basis points in coming quarters.

The economist said inflation would remain elevated even without a fuel-price increase and assessed that the RBI may need to raise interest rates by 25 basis points at each of its December and February policy meetings, following the quarter-point increase in October. Retail inflation rose to 5.54 per cent in September from 4.83 per cent in August, reaching its highest level since late 2024.

Hermann Prasad said recent RBI measures in the currency market should contain rupee volatility, although expensive oil imports and persistent external financing pressures could limit lasting stability. She also assessed that protests over allegations of electoral malpractice were unlikely to materially affect economic growth, as disruption had largely remained concentrated in Delhi and was not extensive enough to affect the wider economy.