- India's retail inflation rose to 3.93% in May from 3.48% in April
- The inflation increase was mainly due to a rise in food prices
- Fuel prices, including petrol and diesel, increased multiple times in May
India's retail inflation soared to 3.93% in May from 3.48% in the preceding month, driven by a rise in food prices, according to the data released by the Ministry of Statistics and Programme Implementation on Friday.
The uptick also comes amid rising fuel prices, as rates of petrol and diesel, along with LPG and CNG, were revised multiple times last month.
Despite the sequential jump, the inflation print came in slightly lower than the consensus estimate of 4.02%, offering a silver lining for policymakers.
The uptick keeps the headline inflation just below the Reserve Bank of India's medium-term target of 4%.
The primary culprit behind the rising headline number was the food basket. Food inflation, which accounts for nearly half of the overall consumer price basket, accelerated to 4.78% in May compared to 4.20% in the previous month. The broader food and beverages category also saw inflation rise to 4.6% from April's 4.0%.
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The Rural-Urban Divide
Rural consumers bore the brunt of the price pressures in May, as retail inflation in these areas outpaced urban regions by a significant margin. Specifically, rural inflation jumped to 4.25%, up from 3.74% in April. Meanwhile, urban inflation rose to 3.53%, compared to 3.16% in the preceding month.
Core Inflation Ticks Higher
Core inflation—the non-food, non-energy component that the RBI watches closely to gauge underlying price pressures—also registered an increase, climbing to 3.8% in May from 3.4% in April.
Consumers also felt the pinch in dining and personal indulgences, with restaurants and accommodation services recording a high inflation rate of 5.8%, while the paan, tobacco, and intoxicants category stood at 4.83%.
Sectoral Inflation Breakdown
A closer look at the sectoral breakdown reveals a broad-based firming of prices across most categories between April and May. The headline CPI climbed from 3.48% in April to 3.93% in May, mirrored by core CPI, which increased from 3.40% to 3.80% over the same period. The pressure was most evident in the food segment, where standalone food inflation accelerated from 4.20% to 4.78%, and the broader food and beverages category rose from 4.00% to 4.60%.
Other essential segments also saw marginal to moderate increases. Clothing and footwear inflation ticked up to 2.98% from April's 2.80%, while housing and utilities saw a negligible rise from 1.71% to 1.73%. In contrast, health inflation provided a rare spot of relief, softening slightly to 1.49% in May from 1.64% in the previous month.
Among other key services and goods, educational services recorded an inflation rate of 2.99%, recreation, sport, and culture stood at 1.98%, and furnishings and household equipment saw a 1.90% increase.
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