New Delhi, Jun 12 (PTI) Retail inflation inched up to 3.93 per cent in May from 3.48 per cent in the preceding month due to higher food prices, as the impact of rising global energy prices began to affect domestic retail petrol and diesel rates, impacting input costs.

Consumer Price Index (CPI) based inflation in the food basket was 4.78 per cent in May, higher than 4.2 per cent in April, according to the National Statistics Office (NSO) data.

The Reserve Bank of India (RBI), which mainly factors in CPI while arriving at its monetary policy, has been mandated by the government to ensure the headline inflation remains at 4 per cent with a margin of 2 per cent on either side.

Precious metal jewellery, tomato, ginger, and raisin (kishmish) and monacca were the five items with higher inflation in May, according to NSO data.

On the other hand, potato, peas, motor car and jeep, cumin (jeera) and 'motorcycle and scooter' were the top 5 key items with low inflation at the all-India combined level in May 2026.

Last week, the RBI raised the inflation projection for the current fiscal to 5.1 per cent from 4.6 per cent, largely due to mounting input costs, triggered by the pass-through of higher global energy prices to retail rates of petrol and diesel.

Since May, retail fuel prices have been raised cumulatively by 7.4 per cent for petrol and 8.4 per cent for diesel.

The increase implies a direct impact of about 36 basis points on headline inflation, which, along with second-order effects, would be reflected in consumer price inflation (CPI) in the coming months, the RBI said in its monetary policy statement.

According to the NSO data, urban inflation was below the national average of 3.93 per cent in May, while it was at 4.25 per cent in rural India.

Among states, the highest inflation was in Telangana (6.15 per cent) and the lowest in Mizoram (1.03 per cent).

Commenting on the CPI data, Dipti Deshpande, Principal Economist, Crisil, said inflation rose in May, led by broad-based pressures from food and non-food segments, with the latter contributing more significantly.

"Rising input costs for producers -- reflected in the Wholesale Price Index inflation of 8.3 per cent in April -- are now increasingly feeding into consumer prices. The impact of the West Asia conflict, which has now entered its fourth month in June, is therefore starting to percolate household budgets," she said.

President of industry body Assocham, Nirmal K Minda, said that inflation at 3.93 per cent for May 2026 remains in benign conditions, even though global headwinds escalated and crude oil prices witnessed a spike.

The supply-side measures and the relatively lower pass-through of the impact of high crude oil prices to consumers have supported these benign inflationary conditions, he said.

"Going ahead, we expect the inflation trajectory to remain within the RBI’s target band, supporting our economic growth and providing room for the RBI to maintain the status quo in the coming policy review too," Minda added.

Megha Arora, Director, India Ratings and Research, said geopolitical tensions and El Nino conditions continue to remain upside risks to inflation.

"Though crude prices today eased following the news of an agreement between Iran and the US. However, it will take time for crude prices to move towards USD70/bbl, closer to pre-West Asia conflict level," she said.

The rating agency expects the RBI to hold rates in the August 2026 monetary policy review. The key indicators to monitor include currency and liquidity, besides the crude oil price.

On the May numbers, Rajeev Sharan, Head of Research, Brickwork Ratings, said the inflation print is broadly in line with expectations, but the rise in food inflation to 4.78 per cent underscores persistent price pressures in perishables, particularly tomatoes, ginger and other vegetables.

Geopolitical tensions and higher crude oil prices likely added to transport, logistics and input costs, while moderation in several other categories helped prevent a sharper spike.

"Overall, May’s print reflects a gentle re-acceleration in inflation, shaped by both weather-related food volatility and imported cost pressures, even as core categories continue to provide an anchor," Sharan added.

NSO under the Ministry of Statistics and Programme Implementation collects real-time price data from selected 1,407 urban markets (including online markets) and 1,465 villages covering all States/UTs. PTI NKD NKD BAL BAL