India's retail inflation rises to 3.93% in May on higher food prices

India’s retail inflation accelerated to 3.93% in May from 3.48% in April largely due to a rise in food prices, according to official data released on Friday.

The reading was, however, below the Reserve Bank of India's medium-term inflation target of 4%.

Inflation in rural areas was higher at 4.25%, while urban inflation stood at 3.53% during the month.

Food inflation, measured by the Consumer Food Price Index (CFPI), rose to 4.78% in May from 4.20% in April.

Rural food inflation was recorded at 4.85%, while urban food inflation came in at 4.66%.

Among states, Telangana recorded the highest inflation rate at 6.15%, while Mizoram reported the lowest at 1.03%.

The increase in inflation was in line with economists' expectations that rising vegetable prices and higher transport costs would push up consumer prices after months of subdued readings.

Inflation has remained below the Reserve Bank of India's medium-term target of 4% for more than a year, allowing policymakers room to support growth.

"May’s print reflects a gentle reacceleration in inflation, shaped by both weather related food volatility and imported cost pressures, even as core categories continue to provide an anchor," Rajeev Sharan, Head of Research, Brickwork Ratings, said.

The latest inflation data comes after the RBI kept key interest rates unchanged at its latest monetary policy committee meeting, while raising its retail inflation forecast for 2026-27 to 5.1%.

RBI Governor Sanjay Malhotra stated that CPI inflation for the first quarter of FY27 was projected at 4.2%, for the second quarter at 5.1%, for Q3 at 5.9%, and for Q4 at 5.4%.