India Inflation May 2023

India: Inflation falls to over two-year low in May

Inflation fell to 4.3% in May from April’s 4.7%. May’s result represented the lowest inflation rate since April 2021. The decline was broad-based, with lower price pressures recorded for food and beverages, fuel and light, and clothing and footwear.

In addition, the trend pointed down slightly, with annual average inflation coming in at 6.2% in May (April: 6.4%).

Lastly, consumer prices rose 0.51% in May over the previous month, matching April’s reading.

Looking ahead, inflation is seen picking up slightly on strong services demand and a higher minimum support price for some crops. A key factor to watch is the monsoon. In early June, the U.S. weather service officially declared that the El Niño weather pattern had begun. El Niño tends to lead to below-average rainfall in India, which would hit agricultural output and thus stoke inflation ahead. India’s weather office continues to forecast normal monsoon rainfall, but that projection could change if El Niño is sufficiently strong.

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