Retail Inflation Rate: Retail inflation at 7.04% in May as against 7.79% in April | India Business News – Times of India

NEW DELHI: India’s retail inflation based on consumer price index (CPI) came in at 7.04 per cent for the month of May, data released by government showed on Monday.
In the previous month, retail inflation had jumped to 8-year high of 7.79 per cent in April.
With this, the retail inflation numbers have now remained above the Reserve Bank of India’s (RBI) upper limit of 2-6 per cent tolerance band for 5 straight months.
The RBI mainly factors in retail inflation while arriving at its bi-monthly policy.
Reserve Bank’s monetary policy committee (MPC) has been tasked by the government to tame retail inflation based on consumer price index (CPI) at 4 per cent (+,-2 per cent).

Late last month, the government announced a series of changes to the tax structure levied on essential commodities and trimmed fuel tax to cushion consumers from rising prices and fight high inflation.
A sharp spike in prices of wheat, tomatoes, potatoes and other vegetables – key ingredients in every kitchen – has kept inflation elevated. Crop yields are down because of dry spells and heatwaves in northern part of the country.
“A lower print than that of April is mainly on account of statistical base effect and reduction in central excise duties on petrol and diesel,” Kunal Kundu, economist at Societe Generale told Reuters, noting inflation had not yet peaked.
Inflation in key commodities
Food inflation, which accounts for nearly half the CPI basket, rose 7.97 per cent year-on-year in May, compared with 8.38 per cent in the previous month – the highest in nearly two years. A nearly 5 per cent fall in the rupee against the dollar this year has also made imports costlier.

However, inflation in vegetables continues to be high at 18.26 per cent, followed by 13.26 per cent in oils and fats as the war in Ukraine continues to pose uncertainty for global supply chains. Ukraine is one of the major sunflower oil producers in the world and India imports a major portion of the commodity from it.
The rate of price rise in fuel and light category in the retail inflation basket to per cent from 10.80 per cent in preceding month.

RBI acts to tame inflation
A surge in crude oil and commodity prices since Russia invaded Ukraine in February has pushed up consumer prices globally, forcing many central banks to raise interest rates to tame inflation.
Last week, the RBI raised repo rate for the 2nd time in 2 months by 50 bps to 4.90 per cent in a bid to tame the soaring inflation.
However, the MPC, headed by RBI governor, noted that inflation is likely to remain above the upper tolerance band of 6 per cent through the first three quarters of 2022-23.
It projected retail inflation at 7.5 per cent in Q1 (quarter ending June 2022); 7.4 per cent in Q2 and at 6.2 per cent in Q3 before coming down to 5.8 per cent in Q4.
RBI governor Shaktikanta Das had said that the Ukraine-Russia war has led to globalisation of inflation and is posing new challenges as it continues to linger. It is accentuating the existing supply chain disruptions, resulting in elevated prices of food, energy and commodities across the globe.
“Countries across the world are facing inflation at decadal highs and persistent demand-supply imbalances. The war has led to globalisation of inflation. Inflationary pressures have become broad-based and remain largely driven by adverse supply shocks,” Das had said.