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June 12 (Reuters) - India's retail inflation rose to 3.93% year-over-year in May from 3.48% in April, driven by higher food and fuel costs, government data showed on Friday, as the outlook continued to remain clouded by price pressures stemming from the Middle East conflict.
A Reuters poll had projected retail inflation at 4.0%.
COMMENTARY:
VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET, MUMBAI
The pass-through of higher energy and raw material costs to consumers has started
to push headline inflation higher, and the risks to the inflation trajectory have intensified with the prospect of a weak monsoon.
We expect inflation to approach 6%, the upper end of the RBI's tolerance band, by the end of this calendar year. This complicates the RBI's policy choices. That said, with expectations of a resolution in West Asia gaining ground and crude below $90, we expect the RBI to stay on pause in the near term.
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
May inflation came in slightly below consensus. While a build-up in price pressures is being watched closely against the backdrop of the ongoing West Asia conflict, India's inflation is at still below the mid-range of the 2-6% target, and thereby less of an immediate policy concern.
This is consistent with the central bank's view that current inflation readings remain manageable. However, policymakers continue to closely monitor upcoming inflation prints as higher input costs gradually filter through from downstream industries to consumers, weather-related risks unfold, and the progress of the monsoon season becomes clearer.
GARIMA KAPOOR, DEPUTY HEAD OF RESEARCH & ECONOMIST- INSTITUTIONAL EQUITIES, ELARA SECURITIES (INDIA), MUMBAI
CPI inflation for May came a tad below expectations despite pass-through of high fuel prices and elevated food prices. With recent measures announced by RBI and government amid the likely expected resolution of West Asian crisis, the macroeconomic backdrop has turned less adverse. We see inflation averaging 5.2-5.3% in fiscal 2027 and see RBI hiking rates by 50 basis points in second half of fiscal 2027.
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
We estimate inflation at 5.2% for fiscal 2027, with headline likely to cross 6% in third-quarter FY27. Apart from elevated energy prices, El Nino related disruptions also pose upside risks to the inflation outlook ahead.
(Reporting by Chandini Monnappa, Urvi Dugar, Saikeerthi and Anuran Sadhu in Bengaluru)
