India's May 2026 retail inflation climbs to 3.93% but stays under RBI target

India’s retail inflation rose to 3.93 % in May 2026, up from 3.48 % in April, according to provisional data from the National Statistics Office. The increase was driven by food price inflation, which jumped to 4.78 %, and higher retail fuel prices that added about 36 basis points to the headline figure. State‑level data showed Telangana with the highest inflation at 6.15 %, while Mizoram recorded the lowest at 1.03 %.

The rate remains below the Reserve Bank of India's (RBI) medium‑term target band of 4 % ± 2 %. The RBI kept the repo rate unchanged at 5.25 % and revised its FY27 inflation outlook to 5.1 % from 4.6 %, citing risks from West Asia geopolitical tensions, a weak monsoon linked to El Niño, and elevated global energy prices. Economists warn that headline inflation could breach 6 % within the next six months if food and fuel pressures persist, though core inflation remains anchored near 4 %.

India’s economy continued to grow robustly, with GDP expanding about 7.7‑7.8 % in the latest quarter. Household budgets are feeling the squeeze from rising food and transport costs, prompting consumer‑price concerns even as overall inflation stays within the RBI’s comfort zone.