New Delhi: Telangana continued to record the highest inflation rate among all Indian states and Union Territories in May 2026, with consumer inflation standing at 6.15 percent, according to a report by SBI Research. The report said higher fuel taxes, rising rural wages and dependence on imported fresh produce may be key reasons behind the state's elevated inflation levels.
Wide Gap in State-Level Inflation
The report highlighted significant differences in inflation trends across the country. Out of 36 states and Union Territories, around 12 to 14 recorded inflation rates above the national average.
Several major states, including Karnataka, Tamil Nadu, Madhya Pradesh and Rajasthan, also reported inflation levels higher than the all-India average, indicating that price pressures remain uneven across regions.
Andhra Pradesh, Assam and Odisha See Sharp Rise
Among the larger states, Andhra Pradesh, Assam and Odisha registered inflation increases of more than two percentage points during the January-May 2026 period. In comparison, all-India inflation increased by 1.19 percentage points during the same period.
Despite these variations, the report noted that most states continue to maintain inflation within the 2%-4% range, suggesting that extreme price pressures are limited to a smaller group of regions.
India's Inflation Rises in May
India's Consumer Price Index (CPI)-based inflation rose to 3.93% in May, compared with 3.48% in April. The report attributed the increase mainly to higher fuel prices and a temporary shortage of LPG cylinders.
Transport inflation witnessed a sharp jump of 176 basis points to 1.8% in May. Inflation in restaurants and accommodation services also rose significantly to 5.7% from 4.2% in April, largely due to their dependence on LPG.
Gold, Silver and Fuel Add to Pressure
Rising prices of precious metals also contributed to higher inflation. Silver jewellery alone added 56 basis points to headline inflation, while gold contributed 30 basis points.
The report further noted that petrol's contribution to inflation increased to 14 basis points. LPG shortages also pushed up prices of cooked meat and snack items, adding to overall consumer costs.
According to SBI Research, global commodity trends show silver prices rising faster than gold, further influencing domestic inflation levels.
