NEW DELHI: Retail inflation continued to firm up during the month of May, with data released by the Central Statistics Office (CSO) showing CPI-based inflation rising to 4.87 per cent compared to 4.58 per cent in April. The figures buttress the RBI’s reasons for hiking benchmark policy rates this week, with rising fuel and food costs being the main drivers for the price rise.
In May last year, retail inflation had stood at a low of 2.18 per cent. However, since then, crude oil prices have been on an inexorable march upwards, hitting $80 in May, before moderating. Brent crude was selling at $76.17 per barrel on Tuesday, up from $48.72 on June 13, 2017.The fuel price rise has had a direct impact on transportation costs, especially of high volume goods like food.
The overall consumer food price index has risen to 3.10 per cent in May, from 2.80 per cent in April. For the fuel and light category, inflation last month stood at 5.8 per cent, up from 5.24 per cent. However, for protein rich items such as meat and fish, eggs as well as milk and products, the inflation in May slowed compared with a month earlier.The RBI has revised its inflation forecasts for the year slightly upwards citing the same factors. The revised projections for the first half of the fiscal year is 4.8-4.9 per cent, and 4.7 per cent for the second half.
Factory output rises slightly
Meanwhile, industrial production expanded by 4.9 per cent in April driven by an improvement in manufacturing, as well as mining sectors. industrial growth, based on Index of Industrial Production (IIP), was 3.2 per cent in April last year and 4.6 per cent in March, 2018. Industry representatives said the numbers show that there is an ongoing recovery in industrial performance.
In terms of industries, 16 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of April 2018 as compared to the corresponding month of the previous year.
“While the rise in consumer non-durable points the revival in rural sector, the increase in consumer durable posted a positive outlook for the urban centres,” pointed out D S Rawat, secretary general of industry body Assocham.