New Delhi, July 14 -- India's retail inflation is expected to strengthen through the remainder of the current fiscal, driven by elevated fuel costs, higher input prices, a weaker rupee and weather-related risks to food prices, prompting the Reserve Bank of India (RBI) to closely monitor inflation before taking further policy action, according to a report by Crisil Ratings.

The report projects Consumer Price Index (CPI)-based inflation to average 5.1 per cent in FY27, sharply higher than 2.0 per cent in the previous fiscal, and sees the possibility of a 25 basis points rate hike in the second half of the fiscal year if inflationary pressures persist.

India's retail inflation rose to 4.4 per cent in June from 3.9 per cent in May, crossing...