May retail inflation at 3-month high of 5.01%

Food inflation down at 4.8% but pulses under price pressure

Consumer Price Index-based inflation rose to a three-month high of 5.01 per cent in May, even as the food segment saw a decline in the rate of price rise, official data showed on Friday.

The inflation had stood at 4.87 per cent in April 2015 and 8.33 per cent in May 2014. While it justifies the Reserve Bank of India (RBI)’s cautious stance in cutting the policy rate earlier this week, RBI was more worried about food inflation, which declined.

Food inflation was down to 4.80 per cent from 5.11 per cent in April 2015. In the year-ago period, it had stood at 8.89 per cent.

While the food inflation was higher in the urban areas at 4.84 per cent against 4.74 per cent in the rural parts, the situation was quite opposite in case of combined inflation. Overall inflation stood at 5.52 per cent in villages and 4.41 per cent in the urban areas.

Even as food inflation was down, the prices of pulses rose at the increased rate. Inflation in pulses increased to 16.62 per cent in May from 12.52 per cent. This was the only segment among food items that saw double-digit inflation. Earlier this month, the Cabinet had decided to import pulses to tame prices.

 

Sugar prices saw a decline, though. In April, prices dropped 5.99 per cent, while in May these turned cheaper by 7.3 per cent.

The sugar sector has been battling a situation of glut. Earlier this week, the Cabinet gave the sector a soft loan of Rs 6,000 crore to pay part of its Rs 21,000-crore dues to farmers.

However, companies were not happy because it did not solve the problem of over-supply and depressed prices.

Elsewhere, house rent, an urban phenomenon, inched down slightly from 4.65 per cent to 4.64 per cent.

However, fuel and light saw inflation rise to 5.96 per cent.