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Home / Business / Retail inflation accelerates to a six-month high of 6.30 per cent in May

Retail inflation accelerates to a six-month high of 6.30 per cent in May

It breached the RBI’s comfort level on the back of costlier food items; according to data released by the NSO, inflation in the food basket was 5.01%
Representational image.

Our Special Correspondent   |   New Delhi   |   Published 15.06.21, 01:08 AM

Retail inflation accelerated in May to a six-month high of 6.30 per cent as fuel and food prices rose at a higher pace, putting pressure on the central bank to tame prices amid a faltering economic recovery.

Retail inflation in May breached the RBI’s comfort level on the back of costlier food items. According to data released by the National Statistical Office (NSO), inflation in the food basket was 5.01 per cent in May, significantly up from 1.96 per cent in the preceding month. The consumer price index (CPI) based inflation stood at 4.23 per cent in April.

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The previous high in retail inflation was 6.93 per cent in November 2020.

Wholesale price-based inflation also accelerated to a record 12.94 per cent in May on account of rising prices of crude oil, manufactured goods and the low base of last year due to the Covid-19 lockdown.

The government has asked the RBI to keep retail inflation at 4 per cent with a margin of 2 per cent on either side. The RBI, which mainly factors in retail inflation while arriving at its monetary policy, had left the key interest rate unchanged earlier this month.

The central bank has projected the CPI inflation at 5.1 per cent during 2021-22; 5.2 per cent in Q1; 5.4 per cent in Q2; 4.7 per cent in Q3; and 5.3 per cent in Q4 of 2021-22.

“At 6.3 per cent, the retail inflation has already gone past the RBI’s target level. Although it is still too early to believe that retail inflation will remain above 6 per cent on a sustained basis given the high base of last year, a rising wholesale inflation, which is gradually finding a reflection in retail inflation, is going to make things difficult for the RBI. However, given the growth inflation dynamics, the RBI will not be in a hurry to tinker with either the policy rate or its accommodative policy stance,” said Sunil Kumar Sinha, principal economist, India Ratings & Research.

Inflation in the fuel and light category remained elevated at 11.58 per cent in May against 7.91 in April. The inflation rate in edible oil and fats soared to 30.84 per cent in May from 25.91 per cent in April.



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