Retail Inflation Hits 16-Month High at 3.93% in May as Food and Gold Prices Surge

New Delhi: Inflation is rising and the common man is feeling it. India's retail inflation hit 3.93 percent in May. That is up from 3.48 percent in April. This is the fifth straight month that inflation has gone up. It is also the closest it has come to the 4 percent mark in the last five months. Back in January this year inflation was at 2.74 percent. It has been climbing every single month since then. The month-on-month jump from April to May was 0.75 percent. That is the biggest single-month spike in prices in the last 16 months.

How much food is getting expensive?

The biggest driver of this inflation is food. Food inflation jumped from 4.2 percent in April to 4.78 percent in May. Rural areas felt it more with food inflation at 4.85 percent. Urban areas were not far behind at 4.66 percent. Vegetables, cereals and other daily essentials have been pushing food prices up consistently over the past several weeks.

Eating-Out costs more too?

It is not just groceries. Eating out has become more expensive as well. The food and beverages category saw inflation at 4.55 percent. Food and beverage serving services recorded inflation of 5.77 percent. Restaurants and accommodation services saw a rise of 5.75 percent. People spending on dining out are noticing the difference in their bills.

What is the impact on transport charges?

The transport sector is also under pressure. Freight and goods transport services recorded inflation of 7.63 percent. Experts point to tensions in West Asia, supply chain disruptions and high crude oil prices as the main reasons behind this. Personal vehicle running costs also rose by 3.06 percent. Anyone who drives or uses transport services regularly is already feeling this pinch.

How much gold and silver shoot up?

Jewellery and precious metals saw a massive jump. Prices in this category rose by 56.35 percent. The reason is straightforward. Gold prices globally have surged sharply and that has fed directly into domestic jewellery prices. Those planning to buy gold for weddings or investment are finding it significantly more expensive than last year.

Education costs also rising?

Families with children in college are also spending more. Higher education costs rose by 3.64 percent. Overall education services inflation came in at 2.99 percent. Fee hikes, study material costs and related expenses are all adding up.

Will your EMI go up?

This is the question on every borrower's mind. The latest inflation numbers are likely to make the RBI's Monetary Policy Committee uncomfortable. Economists say that if crude oil prices stay high, food supply gets disrupted or weather-related problems worsen, interest rates may need to go up by 0.25 to 0.50 percent during the financial year 2026-27. If that happens, home loan, car loan and personal loan EMIs will rise. Borrowers should watch the next MPC meeting closely.