India’s retail inflation for May inched up to 3.05 percent from 2.92 percent in April, driven by an increase in vegetable prices.
The latest price data released by the Central Statistics Office showed that consumer price index (CPI)-based inflation, which measures changes in shop-end prices, remained comfortably within the Reserve Bank of India's target level of 4 percent.
The latest inflation imprint is higher than the 2.99 percent recorded in April, which is a revised figure, but below 4.87 percent recorded in May 2018.
Food prices, a gauge to measure changes in kitchen budgets, grew 1.83 percent in May compared to 1.1 percent in April. The inflation rate in cereals and products stood at 1.24 percent in May as against 1.17 percent in April. The vegetables inflation stood at 5.46 percent in May versus 2.87 percent in April.
“Vegetable inflation at 5.5 percent was at 11-month high and pulses witnessed inflation after a gap of 29 months. While vegetable inflation is mainly due to summer seasons and are cyclical in nature, Ind-Ra believes due to base effect inflation in pulses is likely to inch up to moderate levels,” Sunil Kumar Sinha, Director - Public Finance & Principal Economist, India Ratings & Research said.
Pulses inflation for May stood at 2.13 percent as against a contraction of 0.89 percent in April. Housing inflation was seen at 4.82 percent in May against 4.76 percent in April. Clothing and footwear inflation for May was at 1.80 percent against 2.01 percent in April.
“A decline in core-core inflation (excluding food, fuel and light, and transport and communications) to 23 months low at 4.37 percent indicates that demand conditions have weakened considerably. Even services inflation, a major driver of retail inflation in 2HFY19 (second half) has slowed down considerably,” Sinha said.
India is in the throes of an economic slowdown. According to the official data released on May 31, India's gross domestic product (GDP) grew 5.8 percent in January-March, which confirmed fears of a slowdown. "Real" or inflation-adjusted GDP grew 6.8 percent in 2018-19, lower than previous year's 7.2 percent, data released by the Central Statistics Office (CSO) showed.
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