According to a Reuters poll, India's retail inflation likely fell slightly in May, but remained significantly above the Reserve Bank of India's upper tolerance range for the sixth month in a row, as lower fuel prices offset rising food expenses. The drop is expected to be transitory, and economists believe the RBI will continue to raise interest rates.

To protect consumers from rising prices and combat excessive inflation, the government announced a series of modifications to the tax structure imposed on vital commodities, as well as a reduction in fuel tax, late last month.

Although the entire effect of these measures is not likely to show up in consumer prices until June, experts think they have temporarily helped to slow the upward trend in prices.

However, a steep increase in the cost of wheat, tomatoes, potatoes, and other vegetables, which are staples in every Indian kitchen, will keep inflation high. Dry spells and heatwaves in northern India have reduced crop output. 

Inflation, as measured by the consumer price index (CPI), fell to 7.10 percent in May from 7.79 percent in April, according to a Reuters survey of 45 economists conducted June 6-9.

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Two colours of tomatoes, somewhere Rs 9, somewhere Rs 143 per kg