NEW DELHI, June 13 : India’s retail inflation moved higher for the fourth straight month in May, driven largely by an increase in food prices amid persistent heatwave conditions across several parts of the country.
According to data released by the National Statistical Office (NSO) on Friday, Consumer Price Index (CPI)-based inflation rose to 3.9 per cent in May from 3.5 per cent recorded in April. The latest reading remains within the Reserve Bank of India’s comfort range but indicates growing price pressures in essential commodities.
Food inflation emerged as the primary contributor to the rise, with the food price index accelerating to 4.8 per cent in May compared with 4.2 per cent in the previous month. Higher prices of vegetables, milk products and eggs played a significant role in pushing up household expenses.
Economists attributed the increase to prolonged high temperatures that affected the supply and availability of several food items. Dipti Deshpande, Principal Economist at Crisil, noted that extreme weather conditions continued to influence food markets, leading to a sharper rise in prices of perishable products.
While fuel prices witnessed phased increases during the month amid ongoing tensions in West Asia, the impact on overall inflation remained limited. Fuel inflation stood at 0.8 per cent in May, only slightly higher than the 0.7 per cent recorded in April.
Experts, however, believe the full effect of higher fuel costs is yet to be reflected in consumer prices. Analysts estimate that a cumulative increase of Rs 7.5 per litre in fuel prices could add further pressure to inflation figures in the coming months.
Deshpande said a portion of the direct impact from fuel price revisions has already been captured in the May data, while the remaining transmission is expected to become more evident in June.
Meanwhile, core inflation which excludes volatile food and fuel components remained close to 4 per cent, suggesting that underlying price pressures across other sectors of the economy continue to be stable.
The latest inflation figures are likely to be closely monitored by policymakers and market participants as they assess the impact of food and energy costs on household budgets and economic growth. Although inflation remains below the central bank’s upper tolerance level, the steady upward trend over recent months indicates that price risks have not completely subsided.
With weather conditions, global energy markets and supply chain dynamics expected to influence prices in the near term, economists believe inflation trends during the coming months will play a key role in shaping monetary policy expectations.