Price inflation at 7.04% in May against 7.79% in April



NEW DELHI: Retail inflation in India based on the Consumer Price Index (CPI) stood at 7.04% for the month of May, according to data released by the government on Monday.
In the previous month, retail inflation jumped to 7.79%, its highest level in 8 years, in April.
With that, retail inflation figures have now remained above the upper limit of the Reserve Bank of India’s (RBI) 2-6% tolerance band for 5 consecutive months.
The RBI primarily takes retail price inflation into account to arrive at its fortnightly policy.
The Reserve Bank’s Monetary Policy Committee (MPC) has been tasked by the government to bring consumer price index (CPI)-based retail inflation under control at 4% (+.-2%).
Late last month, the government announced a series of changes to the tax structure levied on commodities and reduced fuel tax to protect consumers from rising prices and combat high inflation.
A sharp spike in the prices of wheat, tomatoes, potatoes and other vegetables – key ingredients in every kitchen – has kept inflation high. Crop yields are declining due to dry spells and heat waves in the north of the country.
Last week, the RBI raised the repo rate for the second time in 2 months by 50 basis points to 4.90% in a bid to rein in soaring inflation.
It forecast retail price inflation of 7.5% in the first quarter (quarter ending June 2022); 7.4% in Q2 and 6.2% in Q3 before falling back to 5.8% in Q4.
RBI Governor Shaktikanta Das had said the war between Ukraine and Russia had led to the globalization of inflation and posed new challenges as it persisted. It compounds existing supply chain disruptions, driving up food, energy and commodity prices around the world.


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