Economists noted that India’s inflation, currently at 3.93% in May, remains below the 4% target set by the Reserve Bank of India. The slight increase from April’s 3.48% is attributed to factors such as rising food prices, fuel price hikes, and weather conditions affecting agriculture.
Radhika Rao, Senior Economist at DBS Bank, highlighted the impact of increased fuel prices and rising food costs on inflation. She mentioned that the recent fuel price hikes and other factors could lead to inflationary pressures in the coming months.
Garima Kapoor, Deputy Head of Research at Elara Capital, stated that despite high fuel and food prices, May’s Consumer Price Index (CPI) inflation was slightly below expectations. She predicted an average inflation rate of 5.2-5.3% for FY27 and anticipated a 50bps rate hike by the RBI in the second half of FY27.
India’s inflation figures align with the central bank’s assessment of manageable inflation levels. Policymakers are closely monitoring future inflation data, considering factors like rising input costs, weather-related risks, and the impact of the monsoon season on prices.
