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India’s Retail inflation marginally eases in May to 7.04% but remains above RBI’s comfort level

By Priyanka Verma 
Updated Date

New Delhi: Data released by the Ministry of Statistics and Program Implementation (MOSPI) on Monday showed that India’s retail inflation remained above RBI’s comfort level, But it eased marginally to 7.04% in May, compared to 7.79% in March.

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This came after the Reserve Bank of India (RBI) last week upped its inflation projection for the current fiscal to 6.7 per cent from 5.7 per cent forecast in April. Food inflation moderated on a marginal decline in food prices after the government imposed restrictions on exports of wheat, export ban on sugar and relief in import duty on edible oils to contain food inflation.

Food inflation in May stood at 7.97% as compared to a record high of 8.38% in April.

However, prices of most food items, including meat, fish, cereals, milk, oil, increased in May compared to April. Inflation Index Vegetables registered a sharp jump from 166.2 in March to 174.9 in May, mainly due to higher tomato prices.

CareEdge chief economist Rajani Sinha said, “The favorable base has masked a sequential rise in prices across the categories. Core inflation also eased, however, was still close to the 6% mark indicating that inflation has become broad-based. With consumer inflation at elevated levels, household’s inflationary expectations have been on the rise in recent months.”

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“In the second half of the fiscal, we could see some cooling of price pressures owing to control measures taken by RBI and the government. Robust Kharif output helped by a conducive monsoon could ease food prices to a certain extent,” Sinha added

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