Consumer Price Index, which measures inflation in India, rose to 5.76% in May, according to reports. The jump, primarily because of rising food and vegetable prices, took the index to the highest it has been in 21 months. It stood at 5.01% in May 2015, PTI reported.
The rise in retail inflation makes it unlikely that the Reserve Bank of India will lower interest rates in its next policy review in August. In its June monetary policy review, the apex bank had raised concerns over rising inflation, though it left policy rates unchanged. Food inflation rose to 7.55% this month – it was 6.4% in April – and vegetable price inflation jumped from 4.82% in April to 10.77% in May, Livemint quoted the Central Statistics Office as saying.
RBI had expected food inflation to be moderated because of predictions of an above-average monsoon. However, the rise in the prices of petrol, diesel and food items in the last month could lead to a further increase in costs. The data released follows industrial production data that showed a 0.8% contraction on factory production in the country for April.