Informist Poll
India's CPI inflation seen rising to RBI's 4% target in May
This story was originally published at 19:34 IST on 8 June 2026
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By Shweta
NEW DELHI – India's retail inflation is likely to have risen to a 16-month high of 4% in May, reaching the Reserve Bank of India's medium-term inflation target, according to the median in an Informist Poll of 12 economists. CPI inflation is estimated to have risen in May because of higher prices of petrol, diesel, and food.
Oil marketing companies in India raised retail fuel prices in May for the first time in nearly four years. Petrol prices have risen by a cumulative INR 7.35 per litre while diesel prices have increased by INR 7.53 per litre.
Even as retail inflation has started rising, the increase is much lower than for wholesale prices. WPI inflation jumped to a 42-month high of 8.30% in April. CPI inflation in the month was at 3.48%. In May 2025, retail inflation was 3.03%, based on the new CPI series. The statistics ministry will release CPI inflation data for May at 1600 IST Friday.
According to Dhiraj Nim, economist at ANZ Banking Group, "the pass-through of higher input cost inflation seen in WPI and PMI (purchasing managers' index) price indices has been shallow so far but will likely increase in the coming months."
Apart from fuel prices, higher food prices are also likely to push up the May CPI inflation print, economists said. "Food will be the main source of upward pressure, with key agricultural indexes rising over the month," Moody's Analytics said in a note.
According to data from the Department of Consumer Affairs, retail prices of tomato rose 23% on month in May. Potato prices rose 2.8% on month in May and onion prices went up 1.6% on month. Retail prices of edible oil rose around 1% on month. "An unfavourable base, shortages of fertiliser, and the prospect of crop damage as a result of the ongoing heatwave all point to further jumps in food inflation," Capital Economics said in a note.
Higher temperatures, the forecast of a sub-normal southwest monsoon, and the likelihood of an El Nino climate pattern clouds the near- and medium-term food inflation outlook, economists said. "Evolving El-Nino conditions remain a risk to the inflation outlook, although a strong Rabi harvest, healthy buffer stocks, and comfortable reservoir levels provide support to food price stability," economists at Nirmal Bang Equities noted.
Core inflation--which excludes food and fuel items, whose prices can be volatile--is seen rising to around 4% in May from April's print of 3.4%, according to the poll. "The core inflation estimate builds in pass-through of input costs from producers to consumers," Gaura Sen Gupta, chief economist at IDFC FIRST Bank, said.
Friday, the RBI raised its headline inflation projection for the financial year 2026–27 (Apr-Mar) by 50 basis points to 5.1%, keeping the war in West Asia building pressure on the domestic economy in view. RBI Governor Sanjay Malhotra said it is not advisable to take action for every deviation from the 4% target. At the same time, he called the medium-term inflation target "sacrosanct" and said it is "not in abeyance".
The RBI's Monetary Policy Committee kept the policy repo rate unchanged at 5.25% but some economists expect the panel to raise interest rates this year considering the higher inflation outlook.
Following is a summary of the poll on CPI inflation in May, in ascending order of estimates:
| Organisation | CPI May estimate |
| Nomura | 3.7% |
| Moody's Analytics | 3.7% |
| STCI Primary Dealer | 3.8% |
| Nirmal Bang Equities | 3.9% |
| QuantEco Research | 3.95% |
| HDFC Bank | 4.0% |
| ANZ Banking Group | 4.0% |
| Bank of Baroda | 4.1% |
| Capital Economics | 4.2% |
| IDFC FIRST Bank | 4.2% |
| Kotak Mahindra Bank | 4.23% |
| Union Bank of India | 4.35% |
End
Edited by Rajeev Pai
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