India’s annual consumer inflation likely moved closer to the central bank’s 4 per cent medium-term target in April as higher fuel costs following the US-Iran war began feeding into prices, a Reuters poll of economists showed.
Inflation has remained below the Reserve Bank of India’s target for more than a year, helped by softer food prices and favourable base effects. But crude oil prices, still about 40 per cent above pre-war levels, threaten to reverse that benign trend in the world’s third-largest oil importer.
The May 4-8 Reuters poll of 46 economists forecast inflation, measured by the annual change in the consumer price index, rose to 3.80 per cent in April from 3.40 per cent in March. Forecasts ranged from 2.80 per cent to 4.20 per cent.
The CPI inflation data is scheduled to be released on May 12.
“We expect April headline inflation to tick up...on higher food and some pass-through of higher global energy prices,” said Rahul Bajoria, head of India and ASEAN economic research, BofA Securities.
“While we expect some increase in restaurant (and) accommodation services impacted by the rise in prices and rationing of the commercial LPG (liquefied petroleum gas) supply, we assess that this will be offset by the gold price decline.” Indian companies raised prices of LPG, widely used as a cooking fuel in households, in March after the Middle East conflict disrupted energy supplies, an effect economists said likely carried into April.
“The increase that we are seeing in part is happening because it is capturing the increase in LPG prices in March. The impact is flowing over to April as well... we are not seeing widespread pass-through at this point... those things happen with a lag,” said Sakshi Gupta, principal economist at HDFC Bank. While India has cut taxes on petrol and diesel to shield consumers from rising prices, economists said that persistently elevated global energy costs would eventually push up retail fuel prices.
“I am assuming that sometime in Q2, rather sooner than later, they will have to hike retail fuel prices because neither the fiscal buffers nor (the) buffers with the OMCs (oil marketing companies) are enough to withstand a prolonged shock,” ANZ economist Dhiraj Nim said. India’s subdued inflation has been helped by softer-than-usual food price increases, but that tailwind may fade if the India Meteorological Department’s warning of a below-normal monsoon lifts inflation and pressures the RBI to raise interest rates. Most economists polled last month expected rates to remain on hold through 2027.
Core inflation, which excludes volatile food and fuel prices, is expected to be at 3.55 per cent in April. India does not publish official core inflation data.
Wholesale price index-based inflation likely rose to an annual 4.40 per cent last month from 3.88 per cent in March, the survey showed.
Published on May 8, 2026