May 12 (Reuters) – India’s retail inflation INCPIY=ECI quickened to 3.48% in April, driven by dearer food prices, government data showed on Tuesday, with the outlook clouded by risks from rising energy costs tied to the Middle East conflict.
A Reuters poll had projected retail inflation at 3.8%.
COMMENTARY:
SHOBHIT AGARWAL, CEO, ANAROCK CAPITAL, MUMBAI
“The CPI reading released today showcases a supportive overall environment for all categories of real estate. A housing inflation rate of 2.15% is quite modest when stacked against the higher 4.20% food inflation.”
“For the commercial and logistics sectors, the cooling of general headline inflation to 3.48% indicates that the costs of construction materials like cement and steel are coming down, which makes construction more affordable.”
DHIRAJ NIM, ECONOMIST/FX STRATEGIST, ANZ RESEARCH, MUMBAI
“A sustained period of crude above $100 per barrel is likely to push inflation up more meaningfully, especially as we expect pump fuel prices to be raised in Q2 2026.”
“While household inflation expectations are beginning to rebound, currently benign headline and subdued core inflation should allow the Monetary Policy Committee to maintain the policy repo rate in the near term. That said, looking ahead to FY27, we forecast CPI inflation to average 5%.”
APOORVA JAVADEKAR, CHIEF ECONOMIST, MUTHOOT FINCORP, MUMBAI
“India’s April ’26 consumer inflation at 3.48% rose significantly less than expected, as the government absorbed most of the oil and gas price shock from transmitting to the retail fuel prices and second round effects are yet subdued, with transport prices remaining flat.”
“Core inflation likely remained at 3.7%. Food prices rose sharply to 4.2%, which poses a significant risk of pushing CPI higher, especially when coupled with fertiliser price shock as well as less-than-normal expected rainfall due to El Nino conditions. We expect the second-round effects from wholesale prices to transmit to CPI in H2 of 2026.”
GAURA SENGUPTA, INDIA ECONOMIST, IDFC FIRST BANK, MUMBAI
“In line with expectations. Core inflation remains low at 1.9% in April and March. This shows that the consumer remains largely insulated from the energy price shock. Gradual rise seen in food inflation.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“The broader impact of high global oil prices is yet to percolate through retail inflation as pump fuel prices and subsidised products remain unchanged. Markets will also monitor El Nino developments and their impact on monsoon strength. Jump in imported costs on account of elevated commodity prices and weak rupee is likely to be more apparent in the wholesale price gauge, which had already outpaced retail inflation in March and is expected to extend the uptrend into 2Q.”
“Markets are increasingly pricing in rate hikes to defend the rupee and address inflationary pressures, although we do not expect policy tightening to be the immediate response.”
SUJIT KUMAR, CHIEF ECONOMIST, NATIONAL BANK FOR FINANCING INFRASTRUCTURE AND DEVELOPMENT, MUMBAI
“CPI inflation print for April 2026 at 3.48% reflects sustained momentum month-on-month in both food and core items of the basket. The government has largely cushioned citizens from developments in West Asia as retail prices haven’t seen the upside revision even as crude prices traded above $110 per barrel in April. Along with monsoon rains, fuel repricing will be key monitorable for inflation outlook ahead.”
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
“Overall, we expect the YoY CPI inflation to harden to ~4.1% in May 2026 from 3.5% in April 2026, around the mid-point of the MPC’s medium-term target range of 2-6%. As a result, we expect the MPC to remain on hold during the June 2026 policy review.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The outlook remains clouded with upside risks amid supply-side disruptions from geopolitics and El Nino. We expect RBI to remain on a wait-and-watch mode for now to assess the pass-through of the risks. However, the risks for early rate hikes (probably from October onwards) are building up.”
VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET, MUMBAI
“The muted rise in inflation in April 2026 reflects limited pass-through of higher energy and raw material costs to end consumers. The trajectory ahead, however, remains concerning — particularly if pump prices rise and trigger second-round effects across the broader economy. A below-normal monsoon, as projected by the IMD, adds another upside risk to food prices.”
“We expect the RBI to maintain a prolonged pause and look through the near-term spike in inflation driven by the West Asia conflict. Should the conflict persist and crude supply remain disrupted, the RBI would face a difficult trade-off between supporting growth and containing inflation.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“Today’s print reinforces the favourable starting point for inflation in the backdrop of the current conflict and provides the central bank sufficient headroom before turning hawkish. That said, an increase in pump prices, as oil prices remain above $100 pbl, could push up inflation over the coming months both through the direct and indirect impact (by raising transport costs). A 5 rupee increase in petrol prices could raise inflation by 20bps just through the direct impact.”
“The risks to inflation remain skewed towards the upside, emanating from higher energy prices, rupee weakness, as well as any disruptions due to El Nino during the monsoon season. We currently estimate inflation to average close to 5% with upside risks to our forecasts.”
(Reporting by Nishit Navin, Kashish Tandon, Aleef Jahan, Urvi Dugar and Pranav Kashyap, Compiled by Chandini Monnappa; Editing by Harikrishnan Nair)
Comments