India’s retail inflation stood at 3.48% in April as prices of food and beverages, clothing, housing and utilities hardened amid rising energy costs linked to the West Asia conflict, according to provisional data released by the ministry of statistics and programme implementation on Tuesday.
The favourable base effect that had helped keep inflation subdued in recent months continued to wane. The rise pushes inflation to a 13-month high in April, up from a 10-month high in February. A Mint poll of 20 economists had put the median estimate for India’s retail inflation at 3.8% in April.
The latest Consumer Price Index (CPI) data can’t be compared with the year-ago period due to the reset of the index basket in January. Retail inflation was recorded at a revised 2.74% in January, marking the debut of the new series with 2024 as the base year. It rose further and stood at 3.21% in February and 3.4% in March.
“The available data suggests that the YoY inflation rates have hardened across most food items during early-May 2026 vis-à-vis April 2026, amid erratic weather conditions and supply disruptions,” said Aditi Nayar, chief economist at Icra Ltd. “Icra expects the YoY inflation in the F&B segment to inch up further to 4.5% in May 2026.”
April’s inflation number is still below the Reserve Bank of India’s 4% medium-term target even as war-led inflationary pressures build up. Inflation is likely to be driven by a fading base effect and rising prices in non-food segments.
Food inflation, which is a key constituent of the country’s consumer price index under the new series, stood at 4.20% in April, up from 3.87% in March. Housing inflation stood at 2.15% last month against 2.11% in February.
According to Rajeev Sharan, head of research at Brickwork Ratings, April CPI inflation at 3.48% is broadly benign, but the rise in food inflation to 4.20% shows how weather-linked pressures continue to shape the inflation path.
“With the monsoon forecast still uncertain, the outlook hinges on whether early rains stabilise vegetable and cereal supplies or amplify existing stresses in perishables. Core inflation at ~3.3% remains relatively contained,” Sharan said. “Yet this softness may prove fragile if higher logistics and input costs, already visible in freight and fertilizer markets, spill over into non-food segments.”
Silver, gold, diamond and platinum jewellery as well as vegetables such as tomato, cauliflower and coconut copra were among the items that had the strongest inflationary pressure. Onion, peas, motor cars and air-conditioners remained the top items, with low inflation in April, the data showed.
Inflation was the highest in the southern states of Andhra Pradesh, Telangana, Tamil Nadu and Karnataka while it was the lowest in Delhi, Mizoram and Chhattisgarh.
Personal care, social protection and miscellaneous goods and services as a group had the highest inflationary effect at 17.66%. Higher oil prices also showed its impact on transport services for goods, which saw higher inflation of 7.60% in April.
The RBI kept interest rates unchanged at its meeting on 8 April, striking a cautious tone as it monitors the impact of surging oil prices on the economy and pledges to curb any excessive currency moves. The central bank’s six-member Monetary Policy Committee voted unanimously to keep the benchmark repo rate at 5.25%, retaining a neutral policy stand and indicating that it is in a wait-and-watch mode.
West Asia conflict
The conflict in West Asia has weighed on India’s economy, prompting a slump in the currency and raising stagflation risks. In his address, RBI Governor Sanjay Malhotra acknowledged the recently announced ceasefire between Iran and the US but cautioned that persistent global supply chain disruptions continue to pose risks to India’s growth and inflation outlook. The breakdown of talks between the US and Iran has further raised uncertainty.
Now that key state elections are over, investors are worried that a possible increase in retail fuel prices will spur inflationary pressures. Brent crude oil has traded above $100 a barrel for much of the past two months, although the government has refrained from raising domestic retail petrol and diesel prices.
“The build-up of potential inflation is what needs to be considered. We see two threats presently: Increase in retail prices of petrol and diesel due to higher crude oil prices; and El Nino and its impact on kharif crop and hence, food inflation,” said Madan Sabnavis, Chief Economist, Bank of Baroda. “To this must be added the force of depreciation of the rupee, which will push up prices further. RBI had projected inflation at 4.6% for the year, which on its own does reduce scope for any rate cut.”
Nayar of Icra said the global energy price shock triggered transmission into commercial LPG cylinder prices and other industrial fuels. This, along with upward revisions in the prices of aviation turbine fuel and premium petrol and diesel prices, is likely to see a full pass-through to the CPI print for May, exerting upward pressure on various items, including LPG cylinders, piped natural gas airfares and restaurants.
“This is expected to push up the non-F&B CPI inflation print in May,” she said, adding that the expectation was that CPI inflation would harden to 4.1 % in May, around the mid-point of the MPC’s medium-term target range of 2-6%, likely keeping interest rates changes on hold at the next MPC meeting due in June.
As inflation accelerates, India’s growth is also expected to moderate. Real gross domestic product (GDP) is estimated to grow by 7.6% during 2025-26, as per the Second Advance Estimates (SAE) of the new GDP series (base year 2022-23).
According to the RBI, GDP growth for FY27 is expected to moderate at 6.9%, a view shared by the Asian Development Bank, which also pegged the country’s growth at 6.9% in the current fiscal. The World Bank estimated India’s GDP would grow 6.6% this fiscal year.
Inflation under the old CPI series, with 2012 as the base year, was 1.33% in December and 0.71% in November.
Food inflation
Food items account for a large share of the CPI, meaning sharp swings in food prices often dominate headline inflation, pushing it up or down, irrespective of broader price trends. From June 2025, food inflation turned negative, with prices consistently lower than a year earlier. This sharply pulled down headline CPI inflation, which fell to an all-time low of 0.25% in October 2025, alongside record-low food inflation of -5.02%.
The new index, which uses 2024 as its base year, is built on spending patterns captured in the 2023-24 Household Consumption Expenditure Survey. The recalibrated weights for index components under the new series have pushed up India’s headline inflation readings modestly, with the share of core items rising about 10 percentage points and volatile food prices getting a smaller say.
The new CPI series also raises housing’s share, reshaping inflation measurement, easing volatility and altering how the RBI interprets headline inflation trends.
As things stand, the new CPI series provides policymakers with a more up-to-date basis for assessing real incomes, consumption trends and purchasing power. A lower weight for the otherwise-volatile group of food and beverages may make headline inflation less volatile.