India CPI Calm before the climb

Research evidence excerpt

India CPI Calm before the climb

12 May 2026

India CPI Economics

Calm before the climb India

◆ CPI came in at a below-expected 3.5%, reflecting limited pass-through of Aayushi Chaudhary

higher energy prices; food and core inflation momentum softened Economist,Sri Lanka India, Indonesia &

HSBC Securities and Capital

◆ We think inflation will pick up as pass-through from producers to consumers Marketsaayushi.chaudhary@hsbc.co.in(India) Private Limited

gathers pace, and pump petrol and diesel prices are revised up +91 22 2268 5543

Pranjul Bhandari

◆ With twin energy and El Niño shocks, we forecast FY27 inflation at 5.6% and Chief India Economist/Strategist, ASEAN

two rate hikes over 4Q26 and 1Q27, taking the repo rate to 5.75% Economist The Hongkong and Shanghai

Banking Corporation Limited,

Singapore Branch

April CPI inflation came in at 3.5% y-o-y, well below expectation (BBG: 3.8%; HSBC: 3.9%). Sequential pranjul.bhandari@hsbc.com.sg

momentum was unchanged at +0.3% m-o-m sa, suggesting limited pass-through so far. Our diffusion index +65 6658 4976

shows that around 80% of items in the CPI basket are still running below 4% inflation. Excluding gold and silver,

headline CPI was 80bp lower at 2.7% y-o-y.

Food inflation remained benign, with sequential momentum easing further to 0.2% m-o-m sa in April from

0.5% in March. Price of pulses moderated and that of sugar and fruits slipped into sequential deflation.

However, cereals, spices, edible oils, eggs and prepared meals saw a notable sequential pick-up.

Energy inflation slowed in annual terms in the midst of an energy price shock and contracted on a sequential

basis (down 0.3% m-o-m sa). We define it as the weighted sum of ‘electricity, gas and other fuels’ along with

‘fuels and lubricants for personal transport equipment’.