New Delhi: Six-month retail inflation was seen with the rising prices of edible oil and protein-rich items up a high of 6.3% in the month of May 2021. This rise has led to a reduction in the interest rate, hence rupturing the comfort zone of the Reserve Bank.
As per the National Statistical Office (NSO) data revealed, shows inflation in the food baskets by 5.01% in May 2021.
Wholesale price-based jumps a record of 12.94% with the price hike in crude oil and manufactured goods amid pandemic. The Consumer Price Index (CPI) too rose from 4.23% to a 6months high of 6.3% while degrading the food inflation to 5.01 % in May 2021. This has further breached the upper band of the inflation target about 10 times since the meeting by the Monetary Policy Committee (MPC).
Moreover, it has risen the woes of the policymaker hence complicating the task of the central bank during the 2nd wave of Coronavirus.
An additional CPI data released by NSO for May 2021 showing the rising rate of meat and fish, eggs, fruits, and pulses and products at an amount of 9.03%, 15.16%, 11.98%, and 9.39% respectively. While fuel and light stood high at 11.58%.
According to Wholesale Price Index (WPI) data, released by the Commerce and Industry Ministry, fuel and power basket spiked to 37.61 percent, 10.83 % for manufactured goods, 23.24 percent for onion during May. But, marginal ease of 4.31 percent was shown in food articles this May.
A continuation of the accommodative for the repo rate and status quo is expected concerning alarming inflation of the price rates of various commodities in 6 months due to global prices amidst pandemic crisis, says Aditi Nayar the Chief Economist at ICRA Ltd.
While the rates of edible oils have started loosening from June, stating further inflation, the price hike in May was higher globally but it will soon ease in coming days, said Suresh Nagpal, chairman of COOIT.
Radhika Rao, an economist & Senior VP, DBS Singapore stated further inflation can be expected with the tax rigidity.
However, the central bank has additionally estimated the CPI inflation at 5.1% for the year 2021-2022 with risks into consideration.