Retail Inflation rises to 4.87% in May 2018; Food Inflation at 3.10%
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has revised the Base Year of the Consumer Price Index (CPI) from 2010=100 to 2012=100 with effect from the release of indices for the month of January 2015.
India's consumer price index (CPI) or retail inflation stood at 4.87% in the month of May 2018 - higher from 4.58% in April 2018 compared to 4.28% in March, 4.44% in February, and is moving towards 5.07% mark recorded in January 2018. Last year, CPI hovered near 2% to below 5%.
May 2018 CPI was also higher compared to 2.18% recorded in the corresponding month of the previous year.
The Consumer food price index (CFPI) stood at 3.10% in May 2018 compared to 2.80% of April 2018. In the same month of previous year, CFPI stood in negative at 1.05%.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has revised the Base Year of the Consumer Price Index (CPI) from 2010=100 to 2012=100 with effect from the release of indices for the month of January 2015.
Major indicators of CPI were all positive with food & beverages at 3.37%, pan, tobacco & intoxicants at 8.00%, clothing & footwear at 5.47%, housing at 8.40%, fuel & light at 5.80% and miscellanous at 5.35%.
RBI increased CPI inflation target to 4.8-4.9% in H1 and 4.7% in H2, including the HRA impact for central government employees, with risks tilted to the upside.
RBI highlighted CPI inflation excluding food and fuel rose sharply in April over March by 80 basis points to reach an ex-HRA level of 5.3%, suggesting a hardening of underlying inflationary pressures.
Furthermore, since the MPC’s meeting in early April, the price of Indian basket of crude surged from US$ 66 a barrel to US$ 74.
RBI said, “This, along with an increase in other global commodity prices and recent global financial market developments, has resulted in a firming up of input cost pressures, as also confirmed in the Reserve Bank’s IOS for manufacturing firms in Q2:2018-19.”
It added, “The resulting pick-up in the momentum of inflation excluding food, fuel and HRA has imparted persistence into higher CPI projections for 2018-19. On the other hand, food inflation has remained muted over the past few months and the usual seasonal pickup delayed, softening the projections in the short run.”
Anagha Deodhar, Research Analysts at ICICI Securities stated that, rising prices of fruits, vegetables and cereals as well as rising transportation and healthcare costs are likely to push up headline inflation. Therefore, Deodhar expected inflation to come in at 5% in May ’18 up from 4.6% in Apr and 2.2% in May ’17.”
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