West Asia war impact: Retail inflation in April may rise to 4% as price pressures build

Price pressures are seen to be building up in the economy with retail inflation seen to have inched up close to 4% in April as food items, especially some vegetables, and cooking gas turned costlier.

Official data for retail inflation for April based on the consumer price index will be released on Tuesday. Headline inflation rose to 3.4% in March from 3.21% in February as the West Asia conflict played out.

In April, analysts pointed out that prices of food items such as tomato and vegetable oil increased. Further, the hike in prices of LPG cylinder is also seen to have led to higher inflation.

Bank of Baroda expects CPI to settle at 4% in April 2026, with risks tilted to the upside. The BoB Essential Commodities Index has shown momentum for the past three months. In April it went up by 1.1%, on a year-on-year basis and on a sequential basis it has picked up by 0.3%, fastest pace since August 2025. “The upward pressure on prices is visible for tomato, onion, edible oils and other miscellaneous items. The increase in prices is more entrenched this month,” it said.

Further, global energy, metals and food prices are also stickier, due to the impact of war. On domestic front, the pass-through to inflation requires monitoring, especially for components such as edible oils, BoB said in the report.

According to the Roti Rice Rate report by Crisil Intelligence, the cost of both home-cooked vegetarian and non-vegetarian thalis rose 2% year-on-year in April as tomato, vegetable oil and liquefied petroleum gas (LPG) cylinders became expensive.

“Tomato prices surged 38% on-year due to lower production following a decline in the acreage across southern states, while global supply pressures pushed up the prices of vegetable oil and LPG 7% on-year each,” noted Pushan Sharma, Director, Crisil Intelligence. While tomato prices remain a monitorable, prices of onions and potatoes are seen to remain high. “Prices of vegetable oil are expected to remain elevated in the short term due to the uncertainty in West Asia,” Sharma said.

With a sustained increase in oil prices, retail prices of fuel are seen to be hiked in coming days, which could lead to further inflationary pressures in coming months. Prime Minister Narendra Modi on May 10 also urged citizens to curb purchase of fuel and discretionary gold amidst the ongoing West Asia conflict.