Nomura expects the impact of the energy shock due to the Middle East conflict to gain ground in India following a limited effect in March, according to a Tuesday research note.
India's CPI inflation ticked up to only 3.4% year over year in March from 3.2% in February, aided by government subsidies for consumers, weak food inflation, and stable core inflation, the equity research firm said.
Further price pressures should pass through in the next few months amid a general increase in input cost pressure and heightened margin pressure for firms, according to Nomura.
Food price inflation may face strains from below-normal rains and El Niño, the research firm said.
Inflation is moving toward slightly under 4% in April, while core inflation could rise to 3.8% from 3.5% last month, Nomura said.
The research firm forecasts headline inflation at an average of 5% in fiscal 2027 and core inflation at 4.5% in average.