India Economic Comment "CPI inflation likely to move higher this year" G...

Research evidence excerpt

India Economic Comment "CPI inflation likely to move higher this year" G...

Global Research

13 May 2026ab

India Economic Comment Economics

IndiaCPI inflation likely to move higher this year

Tanvee Gupta Jain

Economist

CPI inflation at 3.5%YoY in April; MiddleEast conflict yet to fully reflect tanvee.guptajain@ubs.com

+91-22-6155 6070

Headline CPI inflation edged up to 3.5%YoY in April 2026 (from 3.4%YoY in March).

This inflation print was below consensus expectations of 3.8%YoY. The broader impact

of the energy shock is yet to fully show up in headline CPI inflation, as retail pump prices

of gasoline and diesel have been kept unchanged so far. Core inflation remained broadly

stable. CPI excluding food and fuel stood at 3.4% YoY, while core CPI inflation—defined

as excluding Food and beverages, Electricity, gas and other fuels, and Fuels and

lubricants for personal transport equipment—printed at 3.7% YoY in April, largely

unchanged from the previous month. Price pressures in rural areas (3.7%YoY) were

higher than in urban areas (3.2%YoY). Meanwhile, early signs of cost-side pressures are

already visible at the wholesale level, with WPI inflation rising to 3.9% YoY in March,

surpassing CPI inflation, reflecting higher global commodity prices and the impact of a

weaker INR.

Inflation to move higher in FY27 – will the RBI act?

We expect headline CPI inflation to average 5.2% YoY in FY27, compared with

2.1%YoY recorded last year. This reflects higher energy prices and broader spillovers

from the Middle East conflict, including higher airfares (driven by elevated ATF prices),

increased restaurant prices (owing to higher commercial LPG costs), supply-chain

disruptions that raise input costs for manufacturers and retailers, impact of a weaker