Retail inflation moderates to 12-month low of 4.75% in May

Retail inflation was recorded at 4.31% in May 2023 as food prices rose less than 3%.
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NEW DELHI: Consumer price inflation slightly decreased from 4.83% in April to a one-year low of 4.75% in May, as per the government data. However, food price inflation remained steady at 8.7%, with urban households experiencing a higher spike of 8.83% in food prices.

Retail inflation was recorded at 4.31% in May 2023 as food prices rose less than 3%. In May, the Consumer Price Index (CPI) increased by 0.5% on a month-on-month basis, while the food price index saw a rise of 0.73% from the levels recorded in April.

There was a noticeable disparity in the inflation trends between urban and rural consumers for the third consecutive month. In May, rural households experienced a 5.3% increase in prices, while urban consumers saw a retail inflation rate of 4.15%, slightly up from 4.14% in March and 4.11% in April. The Reserve Bank of India (RBI) forecasts that retail inflation will average 4.5% for this year, with an expected average of 4.9% for the April to June quarter.

In May, price pressures persisted for most food items, with notable increases in vegetable prices by 27.3%, cereals by 8.7%, eggs by 7.6%, fruits by 6.7%, and pulses by 17.14%, marking a year of over 10% inflation. Meat and fish prices rose by 7.3% in May, slightly lower than the 8.2% increase in April. Edible oil prices decreased by 6.7% compared to last year, a milder decline than the 9.4% dip seen in April.

“Daily retail food prices indicate upward pressure in the first two weeks of June 2024. Continued pick-up in vegetable prices (M-o-M), pulses and cereals, reflecting impact of heatwave conditions. Core inflation is expected to remain subdued in June. Food prices are expected to ease as the monsoon season progresses. The outlook for inflation remains favourable with monsoon supported by development of La Nina conditions,” Gaura Sen Gupta; Chief Economist, IDFC FIRST Bank Economics Research said.

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