Retail inflation in May rose to 6.3% from 4.23% in April, govt data showed. This was way above anaysts estimate of around 5.2%.
Food inflation surged to 5.01 per cent in May, as compared to 1.96 per cent in April, while core inflation stood at 6.6 per cent.
Today's present reading is unlikely to put any presssure on the RBI and the central bank is likely to maintain an accomodative stance.
"After some signs of cooling off in the past few months, the CPI inflation for the month of May stood at a 6 month high, much higher than the mandated target range of 4-6% for the RBI. Food inflation above the 5% mark, edible oil, and pulses have led to relatively high inflation. This has led to the core inflation shooting up to 6.6%. The high inflation is despite renewed lockdown in the month of May and looks largely a supply-side issue. High & sticky inflation is a cause of worry, despite the low industrial capacity utilization.
Going forward the unlock measures announced by the states, a good monsoon year will help keep the food inflation in check. Though the RBI has stated that its focus will be on growth, a consistently high inflation print will be a cause of concern," says Nish Bhatt, Founder & CEO, Millwood Kane International - an Investment consulting firm.
Accordint to Rajani Sinha, Chief Economist & National Director - Research, Knight Frank India after 5 months of staying within RBI's comfort band, the CPI inflation for May 2021 has again shot up above 6%.
"The surge in inflation has been across all components including, food, fuel and core inflation. The WPI inflation has also inched up sharply in last few months in response to the rise in global commodity prices. For businesses, apart from raw material prices, labour price has also gone up in the last few months due to labour shortage. While the demand force in the economy remains weak currently, the concern is that the supply-side factors could continue to put upward pressure on inflation going forward," she said.
Inflation data by the government is collected from representative and selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster.
During the month of May 2021, NSO collected prices from 99.7% villages and 97.7% urbanMarkets while the Market-wise prices reported therein were 68.1% for rural and 67.5% for urban.