India's retail inflation rises to 3.93% in May, experts warn more

India's retail inflation surged to 3.93% in May from 3.48% in April. Experts attribute the rise to broad-based pressures across food and non-food segments, warning of further increases in the coming months due to global and domestic factors.

India's retail inflation rose to 3.93 per cent in May from 3.48 per cent in April, according to data released by the National Statistics Office (NSO) on Friday with experts attributing the rise to broad-based pressures across food and non-food segments and warning of further increase in the coming months.

Expert Forecasts and Concerns

According to Dipti Deshpande, Principal Economist, Crisil Ltd, the impact of the West Asia conflict is starting to percolate household budgets. "Crisil expects CPI inflation to rise to an average 5.1% this fiscal, from 2.0% last fiscal, with risks from higher fuel prices, currency depreciation, second-round effects and potentially weak rainfall."

Noting over 40 basis-point jump in retail inflation in May 2026 was largely anticipated, Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group said "both food and fuel inflation are likely to remain on an upward trajectory in the months ahead." "Our assessment is that headline retail inflation could breach 6% at some point over the next six months. Even so, the Reserve Bank of India may refrain from adopting a decisively hawkish stance, provided core inflation remains anchored around 4% and inflationary pressures do not become broad-based."

Urban Inflation Accelerates

Debopam Chaudhuri, Chief Economist at Piramal Group, noted that inflation is accelerating faster in urban areas compared to rural regions. "This could further erode purchasing power among urban households and weigh on discretionary consumption demand," she said.

Impact on Real Estate

For real estate sector, the industry remains stable as per Vivek Rathi, National Director- Research, Knight Frank India. Noting that housing inflation has continued to be moderate, Rathi noted "the sector has not become a significant source of price pressures in the economy."

"Going forward, the interplay between global commodity prices, and domestic inflation expectations will be critical in shaping the macroeconomic environment and the interest rate outlook," said Rathi. (ANI)

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