Retail inflation rose in May, exceeding the MPC’s target for the first time since November. Inflation rose more than expected despite weak demand in the economy.
Consumer Price Index inflation rose to 6.3% in May 2021 compared to 4.23% in April, according to data released by the Ministry of Statistics and Program Implementation on Monday. On a monthly basis, the index rose by 1.65% as the gauge climbed to 160.4 in May from 157.8 in April.
Inflation in food and beverages rose to 5.24%, driven by oils and pulses. On a monthly basis, it rose 1.7% from April 2021.
A Bloomberg poll of economists had estimated inflation at 5.38% for May 2021. With the spike in inflation, it is now above the MPC target of 4(+/-2)%.
Core Inflation, which excludes food, fuel and light, rose to 6.34% in May 2021 from 5.17% in April, according to Bloomberg Economics. This was the highest since July 2014.
The “massive 1.5% month-on-month uptick in May 2021is higher than the 1.0% rise in April 2020 amidst the lockdown”, Nayar said. Core inflation is expected to remain above 5.0% throughout FY22, she added.
