India's retail inflation stayed below the central bank's 4% target for the fourth straight month in May on easing food prices, reinforcing the case for last week's surprise steep interest rate cut. Annual retail inflation slowed to 2.

India inflation is likely to average around 2.5 per cent for the next six months, lower than the RBI's forecast of 3.5 per cent, an HSBC report said on Friday. The June inflation print is trending a tad lower than May levels.

Retail inflation plummeted to a 75-month low in May as food prices eased sharply. It is expected to moderate further in June, which may prompt the Reserve Bank of India (RBI) to hit a pause in its rate-cutting cycle after undertaking a "jumbo" cut earlier this month to support growth in the face of easing price pressures.