India’s CPI Inflation Likely to Ease in May, Nearing RBI’s Comfort Zone

India’s consumer price index (CPI)-based inflation is expected to continue its downward trend in May 2025, potentially marking another milestone in the fight against price pressures. According to a median forecast by economists surveyed by Bloomberg, inflation is projected to fall to 2.98%, a further decline after hitting a near six-year low in April.

Core Inflation Shows Slight Uptick

While headline inflation trends downward, core inflation, which strips out volatile food and fuel prices, has shown a modest uptick. April marked the fourth consecutive month of increase in core inflation, which reached 4.22% year-on-year, up slightly from 4.2% in March. This trend suggests underlying price pressures may be persisting in non-food sectors.

Food Prices Under the Monsoon Lens

One critical factor that could influence future inflation prints is the monsoon season, especially in its impact on perishable food prices. Favorable rainfall patterns could help ease food inflation further, but volatility remains a risk depending on regional variations and crop yields.

Outlook

Now that inflation is trending closer to the Reserve Bank of India’s comfort zone, focus is bound to shift to how the trend impacts monetary policy decisions in the next quarters. But even as core inflation remains sticky and risks to food prices are weather-related, policymakers will have to proceed with caution.

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