Silver jewellery emerged as the single-largest item-level contributor to India's retail inflation in May 2026, with SBI Research estimating it contributed 56 basis points to headline inflation compared with 30 basis points from gold. According to SBI Research's latest Ecowrap report, while gold's contribution remained unchanged at 30 basis points from April, silver's contribution increased modestly from 52 basis points in the previous month. The moderate rise in gold and silver prices led to an almost 80 basis points increase in inflation rate in the personal care division. This development represents a significant shift from previous months, where precious metals had not been the primary drivers of inflation increases.
India's retail inflation accelerated to 3.93% in May 2026 from 3.48% in April, according to the latest Consumer Price Index (CPI) data released by the National Statistics Office (NSO). The rise was primarily driven by a significant increase in food inflation, which climbed to 4.78% in May from 4.20% in April. This marks the fifth consecutive month of inflation increases and represents the highest reading in the new series launched in January 2026 with a revised basket of goods and new base. As reported by Zee News, experts are now warning of further pressure ahead, with Crisil expecting CPI inflation to rise to an average 5.1% this fiscal, from 2.0% last fiscal. According to Dipti Deshpande, Principal Economist at Crisil Ltd, the impact of the West Asia conflict is starting to percolate household budgets, with risks from higher fuel prices, currency depreciation, second-round effects and potentially weak rainfall. Sujan Hajra, Chief Economist at Anand Rathi Group, noted that the over 40 basis-point jump in retail inflation was largely anticipated, with both food and fuel inflation likely to remain on an upward trajectory in the months ahead.
Transport inflation surged dramatically by 176 basis points to 1.8% in May compared to April, primarily driven by higher petrol and diesel prices. According to SBI Research, petrol's contribution to headline inflation increased to 14 basis points in May, while higher prices were observed in refined oil, mustard oil, milk, fish, chicken and goat meat. A slight LPG shortage contributed to a rise in restaurant and accommodation costs, with inflation in this category increasing by 154 basis points to 5.7% in May compared to 4.2% in April. The report noted that higher petrol and diesel prices pushed up transport inflation, while the slight LPG shortage affected restaurant and accommodation services, which largely depend on LPG for cooking and heating.
Food and beverages inflation stood at 4.55% in May, with the food component alone recording inflation of 4.78%. According to the latest data, rural areas experienced higher food inflation at 4.85% compared with 4.66% in urban regions. Among specific food items, tomato prices remained a major pressure point with inflation at 48.43% in May compared with 35.26% in April. Ginger inflation accelerated sharply to 32.49% from 14.36% in the previous month. Silver jewellery emerged as the item with the highest inflation, registering a staggering 155.23% annual increase in May, up from 144.36% in April. It was followed by tomatoes, where inflation surged to 48.43%, and gold, diamond and platinum jewellery, which recorded inflation of 40.93%. The rise in headline inflation was more pronounced in rural India, with rural CPI inflation at 4.25% in May compared with urban inflation at 3.53%. Housing inflation was recorded at 2.12% in May, with rural housing inflation at 2.73% and urban housing inflation at 1.91%.
For the real estate sector, the industry remains stable as per Vivek Rathi, National Director- Research, Knight Frank India. Noting that housing inflation has continued to be moderate, Rathi noted "the sector has not become a significant source of price pressures in the economy." Looking ahead, the interplay between global commodity prices, and domestic inflation expectations will be critical in shaping the macroeconomic environment and the interest rate outlook. As reported by Zee News, experts suggest that headline retail inflation could breach 6 percent at some point over the next six months, though the Reserve Bank of India may refrain from adopting a decisively hawkish stance, provided core inflation remains anchored around 4% and inflationary pressures do not become broad-based. The CPI data for June 2026 will be released on July 13, 2026. Last week, the RBI raised the inflation projection for the current fiscal to 5.1% from 4.6%, largely due to mounting input costs triggered by the pass-through of higher global energy prices to retail rates of petrol and diesel.
The latest inflation data suggests households planning jewellery purchases may face higher costs if silver prices continue to rise, as noted by financial experts. As CFP Shweta Shastri explained, "Inflation has slightly increased to around 4%, but the real impact is already visible in your daily life. You may not notice it in one big jump, but slowly everything is getting a little more expensive." She added that fuel prices are another key driver, with rising transport costs affecting everything from groceries to eating out. "That's why your monthly budget may feel tighter even if your income hasn't changed," she noted. SBI Research does not currently expect another rate cut by the Reserve Bank of India in August, with the inflation outlook depending on factors such as global energy prices, exchange-rate movements, monsoon progress and supply-chain conditions.
