May retail inflation in India falls to 2.18% on lower food prices

New Delhi, June 12 (IANS) Retail, or consumer price indexed (CPI), inflation in India during May fell to 2.18 per cent, as compared with 5.76 per cent in the same month of last year, pulled down by sharp fall in food prices, official data showed here on Monday.

The May retail inflation rate fell even as compared to April, when it prevailed at a higher rate of 2.99 per cent.

The consumer food price index (CFPI) moved into deflation as prices in May fell by (-) 1.05 per cent, as compared with a rise of 7.45 per cent in the corresponding month of 2016, pulled down by lower prices of pulses, cereals and perishable goods.

While vegetable prices in May fell by 13.44 per cent as compared with last year, pulses recorded a sharper drop of 19.44 per cent. Food and beverages during the month in consideration recorded a marginal fall of (-)0.22 per cent over the same month last year.

Among non-food categories, 'fuel and light' registered the highest inflation rate of 5.46 per cent in May over that in the same month of 2016.

While the rural CPI in May ruled higher at 2.30 per cent, retail inflation in urban areas was at 2.13 per cent.

The current inflation rate is the lowest rate since the series began in 2012.

In this connection, at its second bi-monthly monetary policy review of the fiscal last week, the Reserve Bank of India (RBI) held its key interest rate at 6.25 per cent for the fourth policy review in succession citing, among other things, the upside risks to inflation.

"At the current juncture, global political and financial risks materialising into imported inflation and the disbursement of allowances under the 7th central pay commission's award are upside risks," the RBI's Monetary Policy Statement said in Mumbai.

Announcing status quo on the key interest rate, RBI Governor Urjit Patel said the abrupt fall in inflation in April "from the firming trajectory that was developing in February and March has raised several issues that have to be factored into the inflation projections".

"Risks are evenly balanced, although the spatial and temporal distribution of the monsoon and the government staying the course in effective food management will play a critical role in the evolution of risks," Patel said.

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