Overview

• Food inflation slumped to 0.99 percent in May, the lowest since October 2021, driven by double-digit declines in vegetable prices and softer pulses and cereal costs.
• Core inflation, which excludes volatile food and fuel items, inched up to around 4.2 percent, signaling persistent underlying demand pressures.
• Rural headline inflation declined to 2.59 percent in May while urban inflation moderated to 3.07 percent, according to NSO data.
• The RBI has cut its policy repo rate by 50 basis points to 5.5 percent and revised its FY26 inflation forecast down to 3.7 percent, shifting its monetary stance to neutral.
• Analysts forecast average CPI inflation near 4 percent for FY26, contingent on steady monsoon rains and the recent reduction of edible oil import duties.