- CPI Y/Y 3.48% vs 3.80% expected
- Prior 3.40%
- Full report here
India’s annual inflation rate climbed to 3.48% in April, a slight uptick from the 3.40% recorded in March. The headline figure remains within the Reserve Bank of India’s comfort zone of 2% to 6%, and below the medium-term target of 4%.
The rise was primarily driven by firming food prices, with food inflation climbing to 4.20% as costs for essential items began to edge higher.
The RBI recently took a cautious approach in light of the situation in the Middle East. The central bank maintained the repo rate at 5.25% and held its “neutral” policy stance, signaling that while it is satisfied with the current downward trajectory from previous years, it is not yet ready to pivot toward rate cuts.
The RBI’s forecasts project inflation to average 4.6% for the 2026-27 fiscal year, with a warning that we might see a gradual build-up toward a peak of 5.2% later in the year.
Although transport inflation remained relatively flat in April at -0.01% due to existing subsidies and price management, the surge in wholesale global energy prices and Aviation Turbine Fuel (ATF) suggests that the “pass-through” to consumers may be inevitable if the conflict persists.
The RBI has explicitly flagged “imported inflation” as a primary concern, noting that high crude oil prices could not only push up fuel costs but also increase the input costs for fertilizers and logistics, eventually feeding back into food prices.
