Informist Poll
CPI inflation seen falling to 6-year low of 3.0% in May
This story was originally published at 17:07 IST on 5 June 2025
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By Shubham Rana
MUMBAI – Retail inflation in India is expected to have declined further in May, with the headline CPI print projected at a six-year low of 3.0%, according to an Informist poll of 12 economists. The last time inflation was 3.0% or lower was in April 2019.
The estimates for May CPI inflation range from 2.7% to 3.4%. The statistics ministry will release CPI data for May at 1600 IST on Jun. 12. CPI inflation was at a 69-month low of 3.16% in April and 4.80% in May 2024.
If inflation falls to 3.0% in May, it would be lower than the Reserve Bank of India's medium-term target of 4.0% for the fourth month in a row and give further confidence to the Monetary Policy Committee to continue lowering interest rates. The MPC, which has cut the repo rate by 50 basis points to 6.00% so far in 2025, is widely expected to reduce the policy rate by another half a percentage point on Friday to support growth amid subdued price pressures.
CPI inflation is expected to have declined for the seventh consecutive month in May largely because of a fall in prices of foods, particularly cereals and pulses, economists said. "The broader comfort will be provided by food inflation. Even globally, food and energy prices remain in favour," said Dipanwita Mazumdar, economist at Bank of Baroda.
At 3.0% inflation, the overall index would have risen by 0.4% on month in May. Typically, the overall index rises sequentially during the summer months mainly because of rise in vegetable prices. On an average, the overall index has risen 0.6% on month in May in the last 12 years.
The expected fall in headline inflation, despite a likely rise in overall index, is because of the statistical effect of a high base. Unless there is a supply shock, the high base effect is expected keep inflation benign at least till October.
According to data from the Department of Consumer Affairs, vegetable prices, which drove bulk of the disinflation over the last six months, showed a mixed trend in May. Retail prices of tomato rose 9.7% on month in May, while potato prices were up 3.1% from April. Onion prices, on the other hand, declined 9.8% sequentially last month.
Mazumdar said some "crawling back of prices" is visible in tomato and potato prices, with both rising on month in May. "Thus, the TOP (tomato, onion, potato) trajectory needs to be closely monitored for any reversal, amid early arrival of monsoon and likely impact on supply chains."
Retail prices of wheat and rice declined 0.9% and 0.3%, respectively, month-on-month in May, according to consumer affairs department data. Prices of most pulses also fell last month, down 1-2%. As per CRISIL's monthly Roti Rice Rate report, the cost of home-cooked vegetarian and non-vegetarian 'thalis' was down 6% on year in May.
Core inflation--which excludes food and fuel items, whose prices can be volatile--is projected to have inched up slightly last month to 4.2% from 4.1% in April.
Core CPI inflation likely inched up in May due to unfavourable base effect, economists said. Core inflation was 3.1% in May last year. "That said, subdued demand pressures and contained commodity prices (except precious metals) is likely to keep core inflation in check," Union Bank of India said. "Core excluding-gold CPI likely remained sharply lower at 3.4% even as it inched up from 3.3% in April."
The RBI expects CPI inflation to average 3.6% in Apr-Jun and 4.0% in 2025-26 (Apr-Mar). A 3.0% print for May would mean that average inflation during the quarter is likely to undershoot RBI's projection. With food prices remaining under control, the central bank is likely to lower its inflation forecast for Apr-Jun and FY26 on Friday.
The following is a summary of the poll on CPI inflation in May:
| ORGANISATION | CPI INFLATION ESTIMATE |
| Bank of Baroda | 2.7% |
| ANZ Bank India | 2.8% |
| YES Bank | 2.83% |
| IDFC FIRST Bank | 2.9% |
| Kotak Mahindra Bank | 2.92% |
| HDFC Bank | 2.97% |
| India Ratings and Research | 3.0% |
| Union Bank of India | 3.0% |
| Nirmal Bang Institutional Equities | 3.04% |
| ICICI Securities Primary Dealership | 3.1% |
| ICRA | 3.2% |
| Acuite Ratings and Research | 3.4% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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