India's May retail inflation rises to 3.93% on year

India's retail inflation rose to 3.93% year-over-year in May from 3.48% in April, driven by higher food and fuel costs, government data showed on Friday, as the outlook continued to remain clouded by price pressures stemming from the Middle East conflict.

A Reuters poll had projected retail inflation at 4.0%.

COMMENTARY:

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

"The sub-4% headline and core inflation points towards comfortable trends in the near term. While softening crude oil prices and the cap on the weakening rupee remain a tailwind, we continue to monitor the impact of adverse monsoons on food inflation. For now, we continue to expect 50 basis points of rate hike beginning in October.

SREEJITH BALASUBRAMANIAN, SENIOR ECONOMIST, BANDHAN AMC, MUMBAI

"The impact of the West Asia conflict will be more visible in CPI in the coming months, given recent higher WPI readings (8.3% y/y in April and likely 9%+ in May), pass-through pressure from higher oil and non-oil input costs, and supply chain disruptions.

Impact on monsoon rainfall and Kharif season crop sowing from a widely expected El Niño this year, is another major factor. Potential resolution of the West Asia conflict and normalization of shipping across the Strait of Hormuz are positives to keep tabs on."

VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET, MUMBAI

"The pass-through of higher energy and raw material costs to consumers has started to push headline inflation higher, and the risks to the inflation trajectory have intensified with the prospect of a weak monsoon.

We expect inflation to approach 6%, the upper end of the RBI's tolerance band, by the end of this calendar year. This complicates the RBI's policy choices. That said, with expectations of a resolution in West Asia gaining ground and crude below $90, we expect the RBI to stay on pause in the near term."

RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE

"May inflation came in slightly below consensus. While a build-up in price pressures is being watched closely against the backdrop of the ongoing West Asia conflict, India's inflation is at still below the mid-range of the 2-6% target, and thereby less of an immediate policy concern.

This is consistent with the central bank's view that current inflation readings remain manageable. However, policymakers continue to closely monitor upcoming inflation prints as higher input costs gradually filter through from downstream industries to consumers, weather-related risks unfold, and the progress of the monsoon season becomes clearer."

GARIMA KAPOOR, DEPUTY HEAD OF RESEARCH & ECONOMIST- INSTITUTIONAL EQUITIES, ELARA SECURITIES (INDIA), MUMBAI

"CPI inflation for May came a tad below expectations despite the pass-through of high fuel prices and elevated food prices. With recent measures announced by the RBI and the government amid the likely expected resolution of the West Asian crisis, the macroeconomic backdrop has turned less adverse. We see inflation averaging 5.2-5.3% in fiscal 2027 and see the RBI hiking rates by 50 basis points in the second half of fiscal 2027."

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

"We estimate inflation at 5.2% for fiscal 2027, with headline likely to cross 6% in the third-quarter of FY27. Apart from elevated energy prices, El Nino-related disruptions also pose upside risks to the inflation outlook ahead."

(Reporting by Chandini Monnappa, Urvi Dugar, Saikeerthi, Anuran Sadhu, Vijay Malkar and Nishit Navin in Bengaluru)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 12, 2026 at 7:05 AM.