India’s consumer price data due to be released later on Monday is likely to show inflation edged up for a second straight month in May, driven by higher prices for food and fuel items, though good rainfall in next three months could dampen food prices.
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The city’s Consumer Price Index, the main gauge of inflation, grew 3 percent from a year earlier last month, slower than the gains of 3.4 percent in April and 3.5 percent in March, the bureau said in a statement.
The rise may make it hard for the RBI to lower the interest rates. While the weather department has forecast above-normal rainfall this year after two droughts, more clarity will emerge only next month on how much help it will offer central bank Governor Raghuram Rajan in meeting his 5 percent CPI target for March 2017. It was 5.01 per cent in May 2015.
Food inflation picked up to 7.55 per cent in May from an upwardly revised 6.40 per cent in the previous month.
Inflation in the vegetable basket more than doubled to 10.77 per cent in May as compared to 4.82 per cent in the previous month.
Ministry of Statistics and Programme Implementation collects data from selected towns and villages to calculate CPI-based retail inflation.
The RBI will meet in August to review its bi-monthly monetary policy.
The Reserve Bank factors in the retail inflation while arriving at its monetary policy.
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A strong monsoon, continued astute food management, as well as steady expansion in supply capacity, especially in services, could help offset upward inflationary pressures, the bank observed.
