“Food inflation contributed 185 basis points (bps), while non-food inflation contributed 250 bps to the headline number,” Dipti Deshpande, Senior Director and Principal Economist, Crisil Ltd said.
“ Within food, apart from a fading favourable base effect, high summer temperatures continued to normalise food inflation from the records low levels seen earlier. Looking ahead, uneven rainfall so far, a below-normal monsoon forecast, and the onset of El Niño conditions could put pressure on food prices,” she added.
On the non-food side, although global crude oil prices have eased from recent peaks, they remain significantly higher year-on-year. Crisil Intelligence expects Brent crude prices to average USD 82–87 per barrel this fiscal, roughly 20 per cent higher than a year ago. Higher domestic fuel prices are also likely to exert broader inflationary pressure as rising input and transportation costs are passed through the economy, Deshpande added.
Crisil expects CPI inflation to firm up over the coming months and average 5.1% this fiscal, compared with 2.0% last fiscal.
“The retail inflation maintained its upward trajectory and surpassed Reserve Bank of India’s benchmark inflation rate of 4 per cent. This was due to high food, transport and gold and silver prices (albeit at a slower pace),” Megha Arora, Director, India Ratings and Research, said.
Fuel impact was evident on user groups – transport prices increased 4.31 per cent (May 2026: 1.75 per cent), while restaurant & accommodation services grew 6.91 per cent (5.75 per cent in May 2026) underlining the impact of ongoing West Asia conflict on commercial liquified petroleum gas, she noted.
Food inflation grew 5.32 per cent (May 2026: 4.78 per cent) due to monsoon shortfall in June, though this is likely to improve in July’s print given improved rainfall, Arora said.
The headline inflation is likely to further rise to 4.9% in July 2026 but remain within RBI’s upper tolerance band of 6 per cent, she added.
For the next monetary policy review in August 2026, India Ratings expects a status quo on key policy rates, however, crude prices, monsoons, currency, and liquidity would be key indicators, Arora said.
In its last monetary policy review, the Reserve Bank of India had revised its CPI inflation for 2026-27 upwards to 5.1 per cent from earlier forecast of 4.6 per cent.
For more details: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2284125®=48&lang=1