India’s Retail Inflation Rises to 3.93% in May, Remains Below RBI’s 4% Target

In May, India’s retail inflation measured 3.93 percent, staying under the RBI’s 4 percent medium‑term goal, as per provisional figures issued by the Ministry of Statistics and Programme Implementation on Friday.

This represents a modest increase from the 3.48 percent recorded in April. Year‑on‑year comparison is not possible because the CPI basket has been rebased, with 2024 now serving as the base year.

The new series, launched in January, reflects consumption patterns gathered from the 2023‑24 Household Consumption Expenditure Survey.

The ongoing uptick in inflation indicates that price pressures are starting to build after a relatively calm beginning to the year.

Analysts cite higher crude oil prices and persistent geopolitical strains in West Asia as primary drivers behind worries about imported inflation.

During its June monetary policy review, the RBI lifted its FY27 inflation projection to 5.1 percent from the previous 4.6 percent, citing risks of a weaker‑than‑expected monsoon tied to El Niño and rising global energy costs.

The central bank left the benchmark repo rate steady at 5.25 percent on June 5. The six‑member Monetary Policy Committee unanimously opted to hold the rate, preserving a neutral stance to reflect caution while it evaluates the effect of higher oil prices and global uncertainties on the domestic economy.

The West Asia conflict has also exerted pressure on India’s economy, influencing currency markets and sparking stagflation worries.

Nevertheless, India’s economic growth has stayed robust, with GDP rising 7.8 percent in the fourth quarter and 7.7 percent for the entirety of FY 26.

Food prices remain a key driver of headline inflation owing to their substantial weight in the CPI basket.

Since June 2025, food inflation has stayed negative, contributing to retail inflation hitting historic lows.

In October of the previous year, headline CPI inflation dropped to a record low of 0.25 percent, bolstered by a food inflation rate of –5.02 percent.