Retail Inflation Hits 6-Year Low At 2.8 pc In May As Food Prices Tumble

New Delhi, Jun 13 (KNN) India's retail inflation dropped to its lowest level in over six years during May, reaching 2.8 per cent as food prices declined significantly across multiple categories.

The consumer price index data released by the National Statistics Office on Thursday marked the fourth consecutive month that inflation remained below the Reserve Bank of India's 4 per cent target threshold.

The May inflation figure represents a notable decrease from April's 3.2 per cent rate and stands as the lowest year-on-year inflation recorded since February 2019.

Food inflation contributed substantially to this decline, falling to approximately 1 per cent in May with a sharp 79 basis point reduction from the previous month. This food inflation rate marks the lowest level observed since October 2021.

Regional variations showed rural areas experiencing 2.6 per cent inflation while urban centres recorded 3.1 per cent during May. The data revealed significant price reductions across key food categories, with vegetable prices declining 13.7 per cent, pulses and related products falling 8.2 per cent, and spices decreasing 2.8 per cent during the month.

Economic projections suggest this downward inflation trend will continue through the third quarter of fiscal year 2026, according to Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

Ghosh anticipates consumer price index inflation will remain below 4 per cent for most of the current fiscal year, with potential increases only in the final quarter.

The forecast indicates average inflation for fiscal year 2026 could range between 3.3 per cent and 3.5 per cent, below the Reserve Bank of India's projection of 3.7 per cent and significantly lower than the previous fiscal year's average of 4.6 per cent.

Given these favourable inflation expectations and the recent 50 basis point rate reduction in June, the central bank appears focused on supporting capital formation to drive sustainable economic growth.

(KNN Bureau)