Retail inflation in double digits at 10.4% in May

High food inflation ensured that Consumer Price Index-based inflation remained in double digits for consecutive month in May, at 10.36 per cent, versus 10.26 per cent in April, on the back of vegetables, protein-based items and edible oil.

The April inflation number was revised downwards to 10.26 per cent from 10.36 per cent as reported last month. Vegetables recorded the maximum inflation, at 26.6 per cent. However, it was just marginally up from 24.6 per cent as recorded in April. Edible oil saw the rate of price rise up to 18.2 per cent versus 17.6 last month, and milk products at 13.74 per cent in May, lower than the 14.94 per cent in April. Protein-based items, like egg, fish and meat, saw inflation rise to 10.50 per cent against 9.95 per cent in the previous month.

The rate of price rise in fuel and light, and clothing, bedding and footwear segments remained in double-digits at 10.7 per cent and 11.4 per cent, respectively. According to the revised data, the inflation rates for rural and urban areas were 9.7 per cent and 11.1 per cent respectively in April.

“Until the measures initiated by the government to ease the supply-side bottlenecks become effective, it would be difficult to bring down overall inflation”, said Arun Singh, senior economist, Dun and Bradstreet.

The wholesale price index on the other hand showed a much lower inflation for May at 7.6 per cent, 0.32 percentage points higher than the April number. It was primary and food products which put pressure on WPI- based inflation, while manufactured products inflation was on a decline, growing 5.02 per cent in May, against 5.1 per cent in April. Food inflation remained in double digits at 10.7 per cent, compared to 10.5 per cent in April.

RBI kept the repo rate and Cash Reserve Ratio unchanged at 8 per cent and 4.75 per cent respectively, much against the general expectations due to the low growth numbers in GDP and industrial production.

For Consumer Price Index based inflation, price data from 1,181 villages and 310 towns is collected and sent to the web portal of Mospi, which has provisions for scrutiny tables to check any large variations in data. While India Post collects data for rural areas, NSSO collects figures for urban areas.