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Retail inflation eases to 7.04% in May

Tags: Economy/Finance

Retail inflation has come down to 7.04% in the month of May. At the same time, it had reached a record 7.79% in April.

  • Food price inflation, which hit a 17-month high of 8.31% in April, eased slightly to 7.97% in May.

  • Rural food inflation has come down to 7.76% from 8.5 percent.

  • However, the Consumer Food Price Index surged further for urban India from 8.09% in April to 8.2% in May.

  • A rise in tomato prices as well as a rise in potato prices pushed up inflation in vegetables, with wheat and rice prices also rising, keeping grain inflation high.

  • Food continued to be the main inflation driver, contributing around 50%.

  • Inflation is expected to hover in the 6.75%-7% range in June as well. 

  • Inflation in vegetables rose to 18.26 per cent in May from 15.41 per cent in April, while that of meat and fish rose to 8.23 per cent from 6.97 per cent.

  • The pace of increase in the prices of milk and related products was 5.64% in May from 5.47% in April.

  • pulses and eggs recorded negative inflation of 0.42% and 4.64%, compared to 0% and 1.86% in April, respectively. 

  • Food inflation eased slightly from 5.96% in April to 5.33% in May.

  • The highest inflation rates in states are as follow-

  • Telangana (9.45%), Maharashtra (8.52%), Andhra Pradesh (8.49%), West Bengal (8.27%), Jharkhand (7.51%) and Gujarat (7.48%).

  • The lowest inflation rates in states are as follow-

  • Kerala (4.82%), Delhi (5.57%), Himachal Pradesh (5.63%), Tamil Nadu (5.72%) and Punjab (5.77%).  

  • Rates above RBI's fixed rate  

  • The government has asked the RBI to keep retail inflation at 4 to 2 per cent. In such a situation, the rate recorded in May is much higher than the margin of RBI.

  • What is CPI based inflation or retail inflation?

  • CPI (Consumer Price Index) monitors retail prices at a certain level for price movement of a particular commodity, goods and services at rural, urban and all India levels.

  • The change in the price index over a period of time is known as CPI-based inflation, or retail inflation.

  • CPI formula - (Price of basket in current period / Price of basket in base period) x 100

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