YES Bank: Softer crude could cool imported inflation, keep RBI on hold despite May WPI at 9.7%

A YES Bank report said India’s newly rebased WPI inflation accelerated to 9.7% year on year in May, driven by a 30.3% rise in fuel prices and higher manufacturing costs. The bank said softer global crude prices and a steady rupee could ease imported inflation pressures and reduce the need for further fuel price hikes. It added that expectations of a potential US-Iran peace deal have contributed to the pullback in oil prices. Weather-related food inflation, alongside oil and natural gas as key transmission variables, remains a risk to watch.