RBI has started factoring gold and silver prices into its inflation outlook | Image- ANI |
Mumbai: The Reserve Bank of India (RBI) has started closely tracking gold and silver prices while assessing inflation trends. In its latest Monetary Policy Committee (MPC) meeting, the central bank said rising prices of precious metals are now influencing its inflation outlook. This marks a shift from earlier focus mainly on food, fuel and core inflation.
Despite this change, overall inflation remains under control. Core inflation-which excludes food and fuel-stayed stable. When gold is removed, core inflation stood at 2.6 percent in December, showing that price pressure in most sectors is still low.
The RBI said the slight increase in its inflation forecast is mainly because of higher precious metal prices. These metals alone added nearly 60–70 basis points to inflation estimates.
Food Inflation Likely To Stay Stable
The central bank expects food prices to remain stable in the near term. Good kharif crop output, strong foodgrain stocks and healthy rabi sowing support this view.
However, risks remain. The RBI warned that geopolitical tensions, energy price swings and extreme weather could push inflation higher. Also, base effects may cause inflation to rise slightly towards the end of FY26 even if real price momentum stays soft.
Why Gold And Silver Prices Are Rising?
Gold and silver prices have risen globally due to uncertainty and geopolitical tensions. Investors see these metals as safe assets during unstable times.
Other reasons include a weaker US dollar, low real interest rates and rising global risks. Recently, gold closed near ₹1,48,860 per 10 grams after a small fall, showing high volatility despite the overall uptrend.
India’s High Dependence On Gold Imports
India imports most of its gold, making domestic prices very sensitive to global trends and rupee movement. If the rupee weakens, gold and silver become more expensive locally.
Demand is also rising for gold ETFs and financial gold products as investors use them to protect savings from inflation and currency risks.
With India being one of the world’s largest gold consumers, price changes in precious metals directly affect inflation more than in many other countries.