Business EconomyPosted at: Jun 13 2026 3:00PM

New Delhi, June 12 (UNI): Retail inflation may have remained below the Reserve Bank of India’s medium-term target of 4 per cent in May, but rising fuel costs, increasing imported inflation and concerns over monsoon progress could push price pressures higher in the coming months, according to a report by SBI Research.
The report said consumer price inflation rose to 3.93 per cent in May from 3.48 per cent in April, reflecting the impact of higher petrol and diesel prices, supply-side disruptions and a mild LPG shortage. Given the current inflation outlook, the report does not expect any policy rate cut by the RBI in August.
Fuel prices emerged as a major contributor to the increase in inflation during May. Transport inflation witnessed a sharp rise, while inflation in restaurants and accommodation services also climbed significantly as LPG shortages increased operating costs. Personal care inflation moved higher due to rising prices of gold and silver, while core inflation also registered a modest increase.
The report noted that imported inflation is becoming an increasingly important factor in shaping domestic prices. Exchange-rate fluctuations and global supply-chain disruptions have pushed imported inflation higher, adding to overall price pressures in the economy.
Among individual items, silver jewellery made the largest contribution to inflation during May, followed by gold. Petrol prices also added to inflationary pressures, while shortages of cooking gas contributed to higher prices of prepared food items. Prices of edible oils, milk, fish, chicken and meat also recorded increases.
Inflationary pressures were stronger in rural areas than in urban centres. Rural inflation rose above 4 per cent in May, while urban inflation remained relatively lower. Higher transport costs and rising prices in food services were among the key drivers across both regions.
The report also expressed concern over the progress of the southwest monsoon. Rainfall during the first part of June remained significantly below normal in several regions of the country. A prolonged shortfall could delay the sowing of key summer crops such as rice, cotton, soybeans and pulses, potentially leading to higher food prices later in the year.
State-wise data showed considerable variation in inflation trends. Telangana continued to record the highest inflation among major states, while Tamil Nadu, Andhra Pradesh, Odisha, Karnataka and several other states also reported inflation levels above the national average.
While inflation remains within the RBI’s tolerance range, SBI Research cautioned that risks from global energy markets, geopolitical developments, exchange-rate movements, monsoon performance and supply-chain disruptions continue to cloud the outlook. As a result, the report expects inflation to rise gradually and reach its peak around October before easing, reducing the likelihood of any immediate monetary policy easing by the central bank.
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