Retail inflation, RBI to revisit focus on growth: Oxford Economics

Retail inflation spike in May might cause the Reserve Bank of India to ''revisit its focus on growth risks'', global forecasting firm Oxford Economics said on Tuesday adding that a rate hike is still unlikely this year.

'Consumer inflation spiked in May... This may cause the RBI to revisit its focus on growth risks. Still, we think a rate hike is unlikely this year,' Oxford Economics said

Rising prices of edible oils and protein-rich items pushed the retail inflation to a six-month high of 6.3 percent in May, breaching the comfort level of the Reserve Bank and, thus, rendering reduction in interest rates a difficult proposition in the near term.

Headline inflation surged to 6.3 percent year-on-year in May, from 4.2 percent in April as inflation rose across the board. Food inflation increased to 5 percent in May from 2 percent in the previous month. Fuel inflation grew 11.6 percent after rising to 8 percent in April. Core inflation jumped to 6.1 percent from 5.2 percent in the previous month.

Wholesale price-based inflation also accelerated to a record 12.94 percent in May on account of rising prices of crude oil, manufactured goods and the low base of last year due to the COVID-19 lockdown.

 

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