India’s CPI inflation decelerated to a 75-month low of 2.82% in May-25, marking the fourth consecutive print that undershot RBI’s 4.0% target mark.
Download ReportQuantEco Research || May-25 CPI inflation: Heat resistant, inflation cools further
India’s CPI inflation decelerated to a 75-month low of 2.82% in May-25, surprising us as well as market consensus forecast on the downside. With this, May-25 CPI reading marked the fourth consecutive print that undershot RBI’s 4.0% target mark.
Notwithstanding the anticipated build-up in sequential food price pressures here on, subsequent inflation prints could continue to look benign, owing to a highly significant favorable base at play (especially over the months of Jun-Jul-25). A healthy Rabi production, upside in area sown under summer crops, measured increase in MSPs as well as expectation of an above normal monsoon, augur well for FY26 food inflation outlook. Separately, ranged global commodity prices offer comfort to both fuel and core inflation outlook for now. As such, we revise lower our CPI inflation estimate for FY26 inflation to 3.5%. Having said, monsoon performance, especially with respect to spatial and geographical spread and any global shocks with potential spillover risks on commodity prices will be closely looked at for any unanticipated disruption in inflation trajectory.