Food Prices Push India’s CPI Inflation Higher for Fifth Straight Month

India’s retail inflation, measured through the Consumer Price Index (CPI), accelerated to 3.93 per cent in May on a year-on-year basis, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).

The latest inflation reading was moderately higher than the 3.48 per cent recorded in April, marking the fifth consecutive monthly increase under the revised inflation series. Despite the uptick, the inflation rate remained well within the Reserve Bank of India’s (RBI) tolerance band of 2 to 6 per cent, providing policymakers with some reassurance amid global economic uncertainties.

The data showed that rural inflation rose to 4.25 per cent, compared to urban inflation of 3.53 per cent, indicating relatively stronger price pressures in rural areas.

Food prices continued to play a major role in shaping the inflation trajectory. The All India Consumer Food Price Index (CFPI) recorded a food inflation rate of 4.78 per cent in May, up from 4.2 per cent in April.

Among commodities witnessing the highest inflation, precious metals and certain food items topped the list. These included:

• Silver
• Gold
• Diamond and platinum jewellery
• Tomato
• Ginger
• Raisin

On the other hand, some products experienced relatively subdued price movements or declines. Items with the lowest inflation included:

• Potato
• Peas
• Motor cars and jeeps
• Cumin
• Motorcycles and scooters

According to the ministry, the increase in overall inflation during May was primarily driven by rising prices in categories such as:

• Personal care and social protection
• Restaurants and accommodation services
• Tobacco and intoxicants
• Food and beverages

The data assumes significance against the backdrop of heightened volatility in international energy markets caused by geopolitical developments in West Asia. Despite concerns over crude oil prices and supply disruptions, domestic inflationary pressures remained contained.

Economists believe the moderate inflation environment provides the RBI with some policy flexibility, although future trends will depend on factors such as monsoon performance, global commodity prices, energy costs, and food supply conditions.

The latest figures suggest that while consumers continue to face rising costs in specific categories, India’s broader inflation outlook remains relatively stable compared with many global economies.