Inflation at Record High of 12.94% in May as Fuel Prices Skyrocket
Image Courtesy: Outlook India
New Delhi: The wholesale price-based inflation accelerated to a record high of 12.94% in May, on rising prices of crude oil and manufactured goods.
Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37%.
This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49%.
"The annual rate of inflation, based on monthly WPI, was 12.94 per cent for the month of May, 2021 (over May, 2020) as compared to (-) 3.37 per cent in May 2020.
"The high rate of inflation in May 2021 is primarily due to low base effect and rise in prices of crude petroleum, mineral oils viz. petrol, diesel, naphtha, furnace oil etc. and manufactured products as compared to the corresponding month of the previous year," the Commerce and Industry Ministry said.
Inflation in fuel and power basket spiked to 37.61% during May, against 20.94% in April. In manufactured products, inflation stood at 10.83% in May, against 9.01% in the previous month.
However, inflation in food articles eased marginally to 4.31% in May, even as onion prices spiked. Inflation in onion stood at 23.24% in May, against (-) 19.72% in April.
The RBI in its monetary policy earlier this month kept interest rates unchanged at record lows and committed to maintain an accommodative policy stance to support growth.
RBI pegged retail inflation at 5.1% in this fiscal ending March 2022, with upside risks from higher commodity prices and re-emergence of higher supply constraints amidst the current phase of lockdowns.
Retail Inflation Rises to 6.3% in May
Retail inflation rose to 6.3% in May, breaching the RBI's comfort level, on the back of costlier food items, government data showed on Monday.
The Consumer Price Index (CPI) based inflation stood at 4.23% in April.
As per the data released by the National Statistical Office (NSO), inflation in the food basket was 5.01% in May, significantly up from 1.96% in the preceding month.
The government has asked the Reserve Bank to keep the retail inflation at 4% with a margin of 2% on either side.
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