Retail inflation at 12-month low, IIP holds steady at 5%

Consumer Price Index (CPI)-based headline retail inflation eased to a 12-month low of 4.75 per cent in May on the back of a softening core and fuel inflation, even though food inflation remained elevated. Separately, the Index of Industrial Production (IIP) also moderated to 5 per cent in April from an upwardly revised figure of 5.4 per cent in the preceding month.

Data released by the National Statistical Office (NSO) on Wednesday showed that food inflation remained sticky at 8.69 per cent in May from 8.7 per cent in April, driven by acceleration in the prices of cereals (8.69 per cent), eggs (7.62 per cent), fruits (6.68 per cent) and pulses (17.14 per cent). Though the prices of vegetables (27.3 per cent) decelerated as compared to the preceding month, they still saw a double-digit rise in May. Meanwhile, the prices for protein-rich items like meat and fish (7.28 per cent), sugar (5.7 per cent) and milk (2.62 per cent) decelerated during the month.

Rajani Sinha, chief economist, CARE Ratings, says though the fuel and light category (-3.83 per cent) remained in deflation and core inflation (3.1 per cent), which excludes food and fuel components, stayed benign, food inflation had remained sticky and is a matter of concern, especially in specific food categories like vegetables and pulses.