May Consumer Inflation Eases To 2.82%, Lowest In 75 Months

India's retail inflation fell further in May, coming in at the lowest since February 2019, led by a fall in prices of several food items.

The consumer price index-based inflation moderated to 2.82% in May, from 3.16% in April, according to data from the Ministry of Statistics and Program Implementation on Thursday.

The CPI inflation was lower than economist estimates. projected to ease to 2.98% in May, according to a median forecast of economists polled by Bloomberg. This was also the fourth straight month when inflation was below the central bank's four-per-cent target.

Food and beverage inflation eased to 1.5% in May from 2.14% in April — the lowest in 73 months. The decline was led by vegetable inflation, which contracted by 13.7%. Inflation in the pulses category contracted by 8.2% after contracting by 5.23% last month.

Core inflation — that excludes the volatile food and fuel components — rose to 4.28 in May from 4.23 in April. This was the highest in 19 months.

ICRA expects the CPI-food and beverages inflation to ease further in June 2025, supported by a favourable base. This is expected to pull down the headline CPI inflation print to about 2.5% in the month, said Aditi Nayar, chief economist at ICRA.

Going forward, the temporal and spatial distribution is crucial to ensure favourable increase in crop yields; excessive rainfall concentrated during short periods of time could destroy the standing crops and thereby remains a key monitorable.

The change in the policy stance appears to be a fairly strong signal of a pause, especially when combined with the unexpected CRR cut, Nayar said, adding that she still expects the RBI Monetary Policy committee to continue with a pause for now.

"Nevertheless, given our lower inflation and growth forecasts vis-a-vis the projections of the MPC, we are not ruling out the possibility of a final 25 basis points rate cut in October 2025, by when the monsoon outturn and its impact on food inflation would be clearer."

• Cereal prices rose by 4.8% after rising by 5.4% in April.

• Meat and fish prices declined by 0.4% compared to a decline of 0.4% in the previous month.

• The inflation rate for milk and milk products was 3.2% compared to 2.7% in the previous month.

• Inflation in the pulses category contracted by 8.2% after contracting by 5.23% last month.

• Clothing inflation was at 2.7%, same as a month ago.

• Housing prices went up by 3.2% compared to 3% last month.

• Fuel and light inflation was 2.8% compared to 2.9% in April.