India’s Inflation More Stable Than Global Peers, RBI Should Hold Repo Rate: ASSOCHAM

New Delhi, May 23 (KNN) India is better positioned to manage retail inflation compared to other top-10 global economies, according to an analysis released by industry body ASSOCHAM on Friday, even as the ongoing conflict in West Asia continues to generate uncertainty around energy prices and supply chains.

India's headline retail inflation stood at 3.2 per cent in February 2026 and rose moderately to 3.5 per cent in April 2026 — a 0.3 percentage-point increase over the period. This compares favourably with the United States, where inflation climbed from 2.4 per cent in February to 3.8 per cent in April — a sharper 1.4 percentage-point rise. 

ASSOCHAM's analysis positions India's inflation trajectory as among the most stable within the world's ten largest economies, PTI reported.

With headline inflation still in benign territory, ASSOCHAM has urged the Reserve Bank of India to maintain the status quo on the repo rate at its upcoming monetary policy review in the first week of June 2026. 

ASSOCHAM President Nirmal K. Minda cautioned that any rate increase at this juncture could dampen business sentiment and weigh on domestic demand.

Minda said, "Though some increase in headline inflation can't be ruled out, given the recent rise in energy prices, it will be a transitory phase in the inflation trajectory, and we are hopeful that inflation will return to benign territory. At this juncture, any increase in the repo rate will have a significant impact on business sentiment and the country's demand trajectory," as quoted by PTI.

Beyond the repo rate, ASSOCHAM called on the RBI to introduce targeted support measures for export-oriented and energy-intensive MSMEs — including liquidity support, interest subvention, and moratorium provisions — given their heightened exposure to the current global disruptions.

ASSOCHAM also welcomed the RBI's decision to conduct a USD 5 billion buy-sell swap auction on May 26 to inject long-term liquidity into the banking system and bolster forex reserves. 

Minda noted that the measure would help manage domestic liquidity conditions and stabilise rupee volatility, which has come under pressure from geopolitical tensions and oil price shocks in recent months.

(KNN Bureau)