May retail inflation at 4-mth high

Consumer price indexbased inflation rose to a four-month high of 4.87 per cent in May, from 4.58 per cent the previous month, on rising food prices, increasing oil prices and a lower base, justifying the Reserve Bank of India’s (RBI’s) monetary move to hike the repo rate.

The fuel and lighting category showed higher inflation at 5.80 per cent in May, from 5.24 per cent in April.

“High oil prices prevailing in May resulted in higher inflation in May,” said Devendra Pant, chief economist at India Ratings.

Food inflation rose to a three-month high of 3.1 per cent, from 2.8 per cent in April. Vegetable prices rose 8.40 per cent, from 7.29 per cent; those of fruit by 12.33 per cent, against 9.65 per cent in April.

However, in unpleasant news for cane growers, the pace of fall in sugar prices was well over 8 per cent, against a little over 4 per cent in April.

Inflation in household goods and services, comprising transport and communication, personal care and effects, recreation and amusement, inched up to 4.97 per cent, from 4.75 per cent. The RBI projected inflation at 4.84.9 per cent in the first half (April to end-September) of the current financial year.

Aditi Nayar, principal economist at rating agency Icra, said inflation remained on track to cross 5 per cent in the next reading, peaking at around 5.3 per cent in June, followed by a base effect led softening in subsequent months.