Retail inflation accelerates to 4-month high in May

Retail inflation accelerates to 4-month high in May

Based on the Consumer Price Index (CPI), the inflation was at 4.58 percent in the preceding month April. Reuters File Photo

Retail inflation jumped to 4-month high of 4.87% in May on costlier food items such as fruits, vegetables and cereals coupled with high fuel rates.

Based on Consumer Price Index (CPI), the retail inflation was at 4.58% in the preceding month, April. In May 2017, however, it was at a low of 2.18%.

The previous high in retail inflation was in January this year at 5.7%.

The overall consumer food price index shot up to 3.10% in May, from 2.80% in April, as per the Central Statistics Office (CSO).

Fruit prices grew at a faster pace of 12.33% in May as against 9.65% in April, while vegetables were costlier by 8.04% (from 7.29% month ago).

Cereals and products saw 2.78 per cent inflation in May as against 2.56% in April, while oil and fats turned dearer at 2.46% from 2.11% in April.

For the fuel and light category, the inflation last month stood at 5.8%, up from 5.24%.

However, for protein rich items such as meat and fish, eggs as well as milk and products, the inflation in May slowed compared with a month earlier.

The CPI-based retail inflation is a key input for the Reserve Bank of India to decide on its key rate.

In its latest policy review earlier this month, the RBI raised the repo rate -- at which it lends to banks -- by 0.25% to 6.25%, the first hike in more than four years due to growing concerns about inflation stoked by rising global crude oil prices as well as domestic price increases.

The banking regulator has revised the first half inflation projection to 4.8-4.9% in the current fiscal, and 4.7% in the second half -- including the HRA impact of central government employees.

Excluding, the HRA revisions, the CPI inflation is projected at 4.6% in first half (April-September) and 4.7% in second half (October-March).

RBI had said the decision of the Monetary Policy Committee to hike the rate was consistent with the neutral stance and in consonance with the objective of achieving the medium-term target for CPI inflation of 4% within a band of (+/-) 2%, while supporting growth.