In May, India's Retail Inflation Rate is expected to Surge to 5.30 Percent
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In May, India’s Retail Inflation Rate is expected to Surge to 5.30 Percent

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Hardik Tokas

According to a Reuters survey, consumer price inflation climbed to 5.30 percent in May from a year earlier, after falling to a three-month low of 4.29 percent in April. According to a Reuters poll, India’s retail inflation likely increased last month after hitting a three-month low in April, owing to rising food and energy costs, but remained inside the Reserve Bank of India’s target range for the sixth month in a row.

Consumer price inflation increased to 5.30 percent in May from a year earlier, after falling to a three-month low of 4.29 percent in April, according to a survey of 40 analysts conducted June 4-9. I realized inflation will have remained within the RBI’s comfort zone of 2% to 6% for the sixth month in a row. While there were fewer supply chain interruptions during the latest pandemic lockdowns than last year, domestic pricing pressures have been exacerbated by global inflation.

Kunal Kundu, India economist at Societe Generale said, “In April, the retail prices of petroleum products were kept unchanged because of multiple state elections being held then, despite rising crude prices. But immediately thereafter, the retail prices were increased about seven times in May itself, which led to substantial shooting up of this inflation component.”

Abhishek Upadhyay, senior economist at ICICI Securities PD said, “Higher international prices for commodities including crude, edible oils and gold are spilling over into consumer inflation.”

According to a Reuters survey of analysts conducted late last month, inflation is expected to average 5.0 percent this fiscal year. At the RBI’s June meeting, the RBI predicted an average rate of 5.1 percent.

The RBI will be able to focus its policies more on the economy if inflation remains within the target range. The economy has been affected by a second coronavirus outbreak.

Even before the tsunami, Asia’s third-biggest economy grew by only 1.6 percent year on year in the January-March quarter. In recent weeks, analysts and prominent organizations have consistently reduced growth forecasts for this fiscal year.

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