The report states that the retail inflation is likely to rise to to 3.5 per cent in May 2025 due seasonal uptick in prices of vegetables
While India’s retail retail inflation eased to a 69-month low of 3.2 per cent in April 2025, a report by Icra has stated that the retail inflation is expected to inch up to 3.5 per cent in May 2025 amid uptick in prices of vegetables.
The report noted that the recent rise in temperatures in North India and unseasonal rainfall in parts of peninsular India may cause an uptick in vegetable prices in the second half of the ongoing month, as a result, boosting the CPI inflation print.
“We anticipate the CPI inflation to average 3.5 per cent in FY26, with the prints for Q2 and Q3 sharply trailing the MPC’s forecast for these quarters, allowing for an additional 75 bps of rate cuts in this calendar year,” the report added.
On a monetary policy front, Icra has stated that there is an expectation of additional rate cuts of 75 basis points (bps) in CY25. The agency noted that the benign April 2025 CPI print, expectations of another sub-four per cent reading in the ongoing month, the recent dip in crude oil prices and the Indian Meteorological Department’s forecast of an above normal monsoon in 2025 as well as early onset in Kerala bodes well for the rate cuts.
Icra added that if the gross domestic product (GDP) growth for Q4 FY25 does not see an acceleration from the 6.2 per cent seen in Q3FY25, the monetary policy committee (MPC) may consider frontloading the rate easing, with a 50 bps cut in the upcoming review.
