In a recent report by AHL Research, headline inflation for May 2026 is anticipated to soar to 11.9% year-on-year (YoY), a significant rise from 3.5% YoY recorded in the same month last year. This sharp increase is largely attributable to a low base effect from May 2025, as well as widespread inflationary pressures across key sectors.

Notable increases are expected in several categories, including transport, which could see a staggering rise of 39.9%, along with housing (16.9%), miscellaneous items (16.5%), food (8.6%), education (8.0%), health (6.8%), and restaurants and hotels (6.2%). Clothing and footwear are also forecast to rise by 5.5%.

Core inflation, measured by the Non-Food Non-Energy (NFNE) index, is projected to be at 8.4% YoY for May 2026, reflecting an uptick from 7.9% YoY in May 2025. On a cumulative basis, average inflation for the 11 months of FY26 is expected to reach 6.7%, compared to 4.7% in the same period last year. Average NFNE inflation is projected to be 7.6%, down from 9.9% in the prior year.

On a month-on-month (MoM) basis, headline inflation for May 2026 is expected to rise by 0.7%, primarily driven by increases in food, transport, and restaurant and hotel indices. The food index is forecasted to rise by 0.8% MoM, largely due to price increases in wheat flour, potatoes, and beverages. Conversely, the housing index is predicted to decline by 1.2% MoM, attributed to a drop in liquefied hydrocarbons.

The transport index is expected to increase 7.5% MoM, mainly due to rising fuel prices. 

As inflation continues to climb, consumers and businesses alike are bracing for the financial impact.y 7.5% MoM, mainly reflecting higher fuel prices.

Courtesy – AHL Research