Rising Gold Prices and Global Tariff Tensions Set to Drive CPI Higher: UBI Report


📈 CPI May Rise Despite Stable Food Prices

A recent report by the Union Bank of India (UBI) forecasts a possible increase in Consumer Price Index (CPI) inflation in the upcoming months. This prediction is based on two primary drivers:

  • Rising global gold prices

  • Ongoing international tariff wars

Even if food prices remain stable, the cost of non-food essentials, especially precious metals like gold, is expected to put upward pressure on inflation.

🥦 April 2025 Retail Inflation Hits Six-Year Low

According to inflation data released by the Ministry of Statistics and Programme Implementation on May 13, 2025, India's retail inflation (measured by CPI) for April 2025 dropped to 3.16%, down from 3.34% in March.

This marks a six-year low, largely due to price reductions in:

  • Vegetables

  • Pulses and related products

  • Fruits

  • Meat and fish

  • Personal care and effects

  • Cereals and cereal-based products

The overall decline in April CPI represents an 18 basis point fall compared to the same period last year.

📊 Core Inflation Trends Remain Stable

The report further highlights that core inflation (excluding food and energy) remained relatively unchanged in April:

  • Core CPI: 4.09%

  • Core CPI excluding gold: 3.3%

  • Core CPI excluding transport: Decreased from 4.26% in March to 4.18% in April

Among the core categories, personal care inflation also showed a decline, dropping from 13.50% in March to 12.90% in April.


🏦 UBI Forecasts Further Repo Rate Cut by RBI

Given the low inflation levels, UBI anticipates another 50 basis points cut in the repo rate by the Reserve Bank of India (RBI), split between June and August 2025.

According to UBI:

“With FY25 CPI at 3.7% and April CPI at 3.16%, we maintain our call for another 50 bps repo rate cut divided between June and August.”

The current CPI remains well within the RBI’s target range of 2% to 6%, providing further room for monetary policy flexibility.

🧮 CPI Trends in Context of Monetary Policy

The RBI has kept the benchmark repo rate steady at 6.5% for eleven consecutive reviews, before making its first rate cut in five years in February 2025.

The central bank in its April monetary policy review stated that inflation is expected to remain under control in FY 2025–26, provided food prices stay moderate and global economic volatility is contained.

🌍 Global Headwinds Still Loom

While inflation has stabilized domestically, external risks like rising gold prices and escalating tariff disputes among major economies could still impact India’s CPI trajectory. The UBI report flags these external triggers as key areas of concern for future inflationary trends, especially as non-food categories gain more weight in the overall CPI basket.

✅ Conclusion

India’s inflation path for 2025 appears under control for now, with retail inflation at multi-year lows and core inflation stable. However, global commodity dynamics and tariff tensions could soon influence price levels—highlighting the need for proactive monetary strategies and policy agility in the coming months.


Location: Pune, Maharashtra, India

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