May Retail Inflation Likely Rebounded To 5.3% On Higher Food Prices: Poll

India’s retail inflation likely rose last month after a three-month low in April, lifted by higher food and energy prices, but stayed within the Reserve Bank of India’s target range for the sixth consecutive month, a Reuters poll found.
“In April, the retail prices of petroleum products were kept unchanged because of multiple state elections being held then, despite rising crude prices,” said Kunal Kundu, India economist at Societe Generale But immediately thereafter, the retail prices were increased about seven times in May itself, which led to substantial shooting up of this inflation component.
The June 4-9 poll of 40 economists showed consumer price inflation rose to 5.30% in May from a year ago, after dipping to a three-month low of 4.29% in April. If realised, inflation will have held within the RBI’s 2%-6% comfort range for the sixth month in a row. While there were fewer supply chain disruptions during the recent pandemic lockdowns compared with last year, a general rise in inflation globally has elevated domestic price pressures. “Higher international prices for commodities including crude, edible oils and gold are clearly spilling over into consumer inflation,” said Abhishek Upadhyay, senior economist at ICICI Securities PD. Inflation was forecast to average 5.0% this fiscal year, according to a Reuters poll of economists late last month. That was similar to the RBI’s estimated average of 5.1%, at its June meeting.

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