NEW DELHI: Retail inflation based on the Consumer Price Index (CPI) rose for the fourth consecutive month to 3.9% in May, up from 3.5% in April, driven by an acceleration in food prices. Data released by the National Statistical Office (NSO) on Friday revealed that the food index climbed to 4.8% in May, compared to 4.2% in the previous month.
Fuel Inflation Remains Contained
Despite the staggered increase in retail fuel prices over the past month amid the ongoing conflict in West Asia, fuel inflation remained contained at 0.8% in May, though slightly higher than 0.7% in April. Economists anticipate the full impact of the fuel price hike will become visible in June.
Impact of High Temperatures on Food Prices
Dipti Deshpande, Principal Economist at Crisil, attributed the rise in food inflation to persistent high temperatures, which drove up prices of vegetables, dairy products, and eggs. She noted that part of the estimated 36 basis points direct impact on CPI from the cumulative Rs 7.5 per litre hike in fuel prices is already visible, with the remaining pass-through expected in June.
Core Inflation Hovers Around 4%
Core inflation, which excludes volatile food and fuel components, remains steady at approximately 4%.
