India’s consumer price inflation hits a 4-month high of 4.87% in May

12 Jun 2018

Consumer price inflation in the country based on the consumer price index hit a four-month high in May, driven by higher fuel prices and a depreciating rupee, justifying the Reserve Bank’s monetary stance.

India’s consumer price inflation rose to 4.87 per cent in May from 4.58 per cent in April, provisional figures released today showed.
However, the food price inflation, which contributes about half of the weight in the CPI index, remained muted, helped by forecast of normal rains this year. It increased 3.1 per cent in May compared with a 2.8 per cent rise in the previous month.
Consumer price inflation for the rural areas stood at 4.88 per cent in May 2018 against 4.67 per cent in April and 2.30 per cent in May 2017.
Consumer price inflation for the urban areas stood at 3.85 per cent in May 2018 against 3.63 per cent in April and -0.6 per cent in May 2017.
Food price inflation stood at 3.10 per cent in May 2018 against 2.80 per cent in April and – 1.0 per cent in may last year.
Food price inflation for rural areas stood at 3.85 per cent in may 2018 against 3.63 per cent in April and 1.85 per cent in May 2017.
Food price inflation for urban areas stood at 1.88 per cent in May 2018 against 1.29 per cent in April and -1.85  per cent in May last year.
The spike in inflation rate was driven mainly by faster increases in fuel prices and a fall in the rupee’s value, which pushes up prices of imported goods.
With this retail inflation has stayed above RBI’s medium-term target of 4 per cent, which also opens the possibility of a hardening of interest rates after RBI’s next monetary policy meeting due in August.
So far in 2018, retail prices of petrol have climbed 9.2 per cent and diesel by 13.7 per cent in the capital, Delhi.
The rupee has depreciated 5.3 per cent since 1 January, pushing up the prices of imported items such as electronic goods and machinery.