The latest retail inflation numbers point to a slight softening in the pace of price gains, and that should provide policymakers some solace that recent interventions appear to be working. Inflation measured by the Consumer Price Index (CPI), slowed 75 basis points from April’s 95-month high of 7.79%, to 7.04% in May. While it is hard to quantify the effect that the RBI’s surprise 40 basis points interest rate increase of early May had on prices, the Centre’s May 21 decision to cut the excise duty on petrol and diesel by Rs 8 and Rs 6, respectively, seems to have had an immediate impact. Inflation in the transport and communication category of the CPI slowed by 137 basis points to 9.54% last month. This key category, with a weight of 8.59 that places it behind only cereals and housing, captures the pump prices of the main transportation fuels, making it a crucial indicator of price pressures in the economy. A closer look, however, shows inflation in the category continued to quicken sequentially, even if at a slower pace. Rural consumers, who have comparatively lower purchasing power than their urban peers and yet are heavily reliant on the fuels for farm operations, experienced a significantly slower softening of only 42bps over the year. With the price of the Indian basket of crude oil now having surged by almost 8.5% from April to a 10-year high this month, and the rupee plunging to successive new record lows against the dollar, it would be unwise to drop one’s guard. Food prices, the other driver of retail price gains, offered far less respite with the Consumer Food Price Index (inflation slowing by only 34 basis points to 7.97%. With the RBI’s consumer confidence survey showing an appreciable deterioration in households’ expectations of the one-year ahead price level, authorities must proactively try to tame inflation.