Retail inflation climbs to 13-month high of 3.5% in April on higher food, restaurant prices

Retail inflation quickened to a 13-month high of 3.5% in April 2026, although still coming in lower than what was expected by most economists. The price rise was largely driven by higher food inflation as well as higher prices at restaurants as they passed on higher fuel prices to consumers.

Data on the Consumer Price Index (CPI) for April 2026 showed that inflation quickened from the 3.4% registered in March 2026, the first month following the start of the war in West Asia.

“The April inflation reading came in softer than expectations,” Upasna Bhardwaj, chief economist at Kotak Mahindra Bank said, a sentiment echoed by Madan Sabnavis, chief economist at the Bank of Baroda as well as Rajni Thakur, chief economist at L&T Finance.

“However, the outlook remains clouded with upside risks amid supply side disruptions from geopolitics and El Nino,” Ms. Bhardwaj said.

Eating becomes costlier

Inflation in the food and beverages category climbed to 4% in April 2026 from 3.7% in March.

“Food and beverages had inflation of 4% driven by tomatoes, coconut, etc, even while inflation for potatoes and onions came down into the negative zone,” Mr. Sabnavis explained.

Simultaneously, inflation in the restaurant and accommodation services sector quickened sharply to 4.2% in April 2026 from 2.9% in the previous month.

“This was a fall out of higher LPG prices for these establishments which led to higher prices being charged,” Mr. Sabnavis said.

Cheaper transport

Notably, inflation in the transport sector followed the opposite trajectory, moving in a contractionary direction. That is, inflation in the transport sector stood at -0.01% in April 2026 as compared to 0% in the previous month.

This, according to Ms. Thakur, was more because of the passenger transport services sector rather than the price at which goods were transported.

“While food prices have nudged higher by around 30 basis points, overall transportation prices have actually eased,” Ms. Thakur said. “This is largely on account of easing prices for the services sector, while prices of transport of goods have increased by 7.6% in the month.”

Several of the other key sectors saw inflation remaining largely the same in April 2026 as in the previous month — clothing and footwear (2.8% in April 2026 vs 2.75% in March), health (1.6% vs 1.7%), information and communication (0.5% vs 0.3%), and education (3.1% vs 3.3%).