Retail Inflation in May Could Drop Below 3%: Economists

However, some economists see a slightly higher inflation print for May—at around 3.25%

- Rhik Kundu

Higher supplies of tomatoes, onions, and potatoes, softer global gold prices, and a favourable base effect may have eased retail inflation further to 3% or below in May, the lowest since April 2019, according to economists. That would mark a fourth consecutive month of sub-4% print.

The projection came as the Reserve Bank of India (RBI) on Friday lowered its inflation projection for the April-June quarter to 2.9% from its earlier projection of 3.6%.

The consumer inflation reading for May is likely to fall to 2.7% primarily due to a drop in food inflation, Dipanwita Mazumdar, economist at Bank of Baroda, said in a recent note.

"Even globally, food and energy prices remain in favour. Q1FY26 also has the advantage of a favourable base for the inflation print," Mazumdar said, adding that "inflationary pressures remain skewed to the downside".

"The volatile TOP (tomatoes, onions, and potatoes) prices are still holding ground supported by better production. A moderation in gold price in May would also largely cap core inflation," she added.