Retail inflation likely eased to 3% in May, lowest in six years, shows Mint poll
India's retail inflation is expected to have eased further, supporting the Reserve Bank of India’s decision to frontload the repo rate cut last week.
India’s retail inflation likely eased further to 3.0% in May from 3.2% in April, driven by softening food prices, particularly in cereals and pulses, and aided by a favourable base effect, according to a Mint poll of 15 economists.
If the projections hold, this would mark the lowest inflation print in six years and the longest streak of continuous easing in at least five years. Official data is due on Thursday.
“Food inflation, which was 7.9% in May 2024 and 2.14% in April 2025, is expected to ease further to 1.96% in May 2025, partly on the back of high base effect and partly due to softening cereals and pulses prices during the month," said Union Bank of India in a note last week.
A sharp correction in food prices, especially vegetables, has pulled inflation down in recent months. Since food accounts for 40% of the inflation basket, it adds significant volatility to the headline number.
While headline inflation is expected to remain below 4% for a fourth consecutive month, core inflation, which excludes food, fuel and light, is likely to edge up from 4.13% in April. Core inflation has stayed above 4% since February, but economists don’t see it as a threat to the broader inflation trajectory.
The continuing decline in headline inflation supports the Reserve Bank of India’s (RBI) move to frontload its rate cut last week—by 50 basis points—despite widespread expectations of a 25-basis-point reduction.
Read this | Mint Explainer: RBI cuts repo rate by 50 bps. How will it impact lenders and borrowers?
Inflation has eased faster than anticipated, prompting the RBI to revise its FY26 inflation forecast down to 3.7% from 4.0%. After likely bottoming out at 2.9% in Q1, inflation is expected to rise to 3.4% in Q2, 3.9% in Q3, and 4.4% in Q4, according to the central bank’s projections.
The RBI has signalled limited room for further easing, even as inflation is expected to end the year at a sub-4% level.
Also read | In charts: Retail inflation eases again, but signs of price pressures are there
“After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth," the monetary policy committee said in a statement last week, while changing the stance to neutral from accommodative.
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