Consumer Price Index (CPI) inflation for the month of May rose to 5.76%. Food inflation rose to 7.55%.
Consumer Price Index (CPI) inflation for the month of May rose shockingly to 5.76% versus 5.47% (revised) in April. Food inflation rose to 7.55% versus 6.40% in April.
The vegetable price inflation rose alarmingly to 10.77% versus 4.82% MoM. While clothing, footwear inflation declined to 5.37% versus 5.56%, cereals & products inflation rose to 2.59% versus 2.43% MoM.
Combined fuel & light inflation declined to 2.94% versus 3.03% MoM. Urban consumer housing inflation also dipped to 5.35% versus 5.37% MoM.
The data would act as a dampener for any rate-cut hopes from the RBI.
In the RBI monetary policy review last week, Raghuram Rajan said, “The expectations of a normal monsoon and a reasonable spatial and temporal distribution of rainfall, along with various supply management measures and the introduction of the electronic national agriculture market (e-NAM) trading portal, should moderate unanticipated flares of food inflation.”
“Nonetheless, there are upside risks – firming international commodity prices, particularly of crude oil; the implementation of the 7th Central Pay Commission awards which will have to be factored into projections as soon as clarity on implementation emerges; the upturn in inflation expectations of households and of corporates; and the stickiness in inflation excluding food and fuel. Taking these factors into account, the inflation projections given in the April policy statement are retained, though with an upside bias,” he cautioned.
Meanwhile, the Index of Industrial Production (IIP) for the month of April came in at a disappointing (-)0.8%. This implies that industrial production has contracted 0.80 per cent in April as against a growth of 3 per cent a year ago.
This is the first IIP contraction in three months. The IIP had registered a growth of about 2 per cent in February this year.
What has economists and analysts worried is that no signs of sustainable recovery are visible in the coming quarters.