New Delhi: India’s retail inflation eased to 7.04 percent in May from an 8-year high of 7.79 percent recorded in the previous month on softening food prices, government data showed on Monday.
A favorable base effect is among the major reasons for the decline in the inflation numbers in May 2022. Consumer Price Index (CPI) based retail inflation stood at 6.3 percent in May 2021.
Despite the decline, the headline inflation remains above the Reserve Bank of India (RBI) upper tolerance level of 6 percent for the fifth consecutive month.
Rural retail inflation declined to 7.01 percent in May 2022 from 8.38 percent recorded in the previous month. CPI-based urban inflation declined to 7.08 percent during the month under review from 7.09 percent in April 2022, as per the data released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
Food inflation based on the Consumer Food Price Index (CFPI) eased to 7.97 percent in May 2022 from 8.31 percent in the previous month. In May 2021, CFPI-based food inflation stood at 5.01 percent.
The CPI-based retail inflation is projected to remain at 7.5 percent in the first quarter of the current financial year, as per the RBI.
In its monetary policy review last week, the RBI raised the inflation forecast for the current financial year to 6.7 percent from its earlier projection of 5.7 percent.
As per the RBI’s new projection announced after the Monetary Policy Committee (MPC) meeting, inflation is likely to remain above the central bank’s upper tolerance limit of 6 percent for the first three quarters of 2022-23.
In the second quarter CPI-based, retail inflation is projected at 7.4 percent and for the third quarter, it is projected at 6.2 percent, as per the RBI.
Inflation is likely to come within the RBI’s tolerance limit in the fourth quarter of 2022-23. For the fourth quarter of the current financial year, the RBI’s forecast for inflation is 5.8 per cent.
For the calculation of the May inflation data, the Ministry of Statistics and Programme Implementation said “price data are collected from 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 2022, NSO collected prices from 99.8 percent of villages and 98.3 percent of urban markets while the market-wise prices reported therein were 90.0 percent for rural and 93.1 percent for urban, the ministry said in a statement.