May 12 (Reuters) – India’s retail inflation INCPIY=ECI quickened to 3.48% in April, driven by dearer food prices, government data showed on Tuesday, with the outlook clouded by risks from rising energy costs tied to the Middle East conflict.
A Reuters poll had projected retail inflation at 3.8%.
COMMENTARY:
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
“The CPI inflation inched up only mildly to 3.5% in April 2026 from 3.4% in March 2026, much softer than our expectation of a jump to 3.9% in the aftermath of the West Asia crisis. This offers some cushion, given the prolonging of the stalemate in West Asia, with crude oil prices remaining elevated for the time being, as well as the possibility of a sub-par monsoon.”
“Overall, we expect the YoY CPI inflation to harden to ~4.1% in May 2026 from 3.5% in April 2026, around the mid-point of the MPC’s medium-term target range of 2-6%. As a result, we expect the MPC to remain on hold during the June 2026 policy review.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The April inflation reading came in softer than expectations. However, the outlook remains clouded with upside risks amid supply-side disruptions from geopolitics and El Nino. We expect RBI to remain on a wait-and-watch mode for now to assess the pass-through of the risks. However, the risks for early rate hikes (probably from October onwards) are building up.”
VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET, MUMBAI
“The muted rise in inflation in April 2026 reflects limited pass-through of higher energy and raw material costs to end consumers. The trajectory ahead, however, remains concerning — particularly if pump prices rise and trigger second-round effects across the broader economy. A below-normal monsoon, as projected by the IMD, adds another upside risk to food prices.”
“We expect the RBI to maintain a prolonged pause and look through the near-term spike in inflation driven by the West Asia conflict. Should the conflict persist and crude supply remain disrupted, the RBI would face a difficult trade-off between supporting growth and containing inflation.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“Retail inflation remained low at 3.5% in April as the pass-through of higher oil prices to households has so far been contained, with petrol and diesel pump prices remaining constant. Today’s print reinforces the favourable starting point for inflation in the backdrop of the current conflict and provides the central bank sufficient headroom before turning hawkish.”
“That said, an increase in pump prices, as oil prices remain above $100 pbl, could push up inflation over the coming months both through the direct and indirect impact (by raising transport costs). A 5 rupees increase in petrol prices could raise inflation by 20bps just through the direct impact.”
“The risks to inflation remain skewed towards the upside, emanating from higher energy prices, rupee weakness, as well as any disruptions due to El Nino during the monsoon season. We currently estimate inflation to average close to 5% with upside risks to our forecasts.”
(Reporting by Pranav Kashyap, Compiled by Chandini Monnappa; Editing by Harikrishnan Nair)
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