India’s Consumer Price Index (CPI) inflation is expected to settle at 4 percent in April 2026, although risks remain skewed to the upside due to rising food and global commodity prices, according to a report by Bank of Baroda.
The bank’s Essential Commodities Index (BOB ECI) recorded strong momentum for the third straight month, rising 1.1 percent year-on-year in April. On a month-on-month basis, the index increased 0.3 percent, its fastest pace since August 2025.
“The upward pressure on prices is visible for Tomato, Onion, edible oils and other miscellaneous items,” the report said, adding that the “increase in prices is more entrenched this month.”
“Against this backdrop, we expect CPI to settle at 4% in Apr’26, with risks tilted to the upside,” the report stated.
Bank of Baroda noted that global prices of energy, metals, and food commodities are becoming increasingly sticky due to the continuing impact of geopolitical conflicts. The report said this would require close monitoring of how higher international prices are passed on domestically, especially in categories such as edible oils.
On the domestic front, supply pressures are also emerging. Arrival data for Tomato, Onion, and Potato (TOP) declined 12.8 percent in April 2026 compared to the same period last year.
The report further pointed to heatwave warnings issued by the India Meteorological Department (IMD) for May across major producing states including Gujarat, Maharashtra, and parts of the East Coast. According to the report, this could further impact crop arrivals in the coming months and add upside pressure to inflation.
“Arrivals of TOP might be impacted in the coming months and some upside risks to inflation remain,” it said.
Globally, the report observed that inflationary pressures are no longer limited to energy markets alone. World Bank data indicates that rising prices are now spilling over into food categories such as cereals and edible oils.
“With no sign of a formal peace deal in place, the pass through of higher input prices from producers to consumers cannot be ruled out,” the report stated, adding that the risk of imported inflation has increased compared to previous months.
Within the BOB ECI basket, 16 out of 20 commodities recorded higher inflation in April. Tomatoes, onions, pulses, and edible oils including sunflower, mustard, and soya oil saw the sharpest increases.
At the same time, the report noted that potato and onion prices continue to remain in “favorable double-digit deflation,” while most pulses are still witnessing deflation, except Masoor dal.
On core inflation, Bank of Baroda expects inflation excluding food and fuel to remain around 3.5 percent in April 2026. However, when excluding pan, tobacco, gold, silver, and precious metals, core inflation is estimated to remain lower at around 1.8 to 1.9 percent.
The report added that core inflation is likely to stay contained overall, although higher aviation turbine fuel (ATF) and commercial LPG cylinder prices could create upside pressure through transport, restaurant, and hospitality-related inflation.
