<h1>Headline inflation drops to 2.8% in May while core inflation stays above 4% for fourth month</h1> A leading ratings agency reported headline inflation based on consumer price index fell to 2.8 percent in May 2025, driven by declining food inflation. However, core inflation excluding food and fuel has risen above four percent for four consecutive months, though remaining below the decadal trend. The agency noted that rising core inflation indicates strengthening domestic demand but attributed most recent increases to global economic volatility rather than domestic factors. Gold prices, which react to global signals, distort domestic price signals in India's core inflation index due to higher weighting compared to other countries, potentially causing misinterpretation of economic indicators.