The quantitative price-based inflation hit an all-time high of 12.49% in May on the back of a spike in prices of manufactured products, crude petroleum, and mineral oils.
It touched the double-digit mark of 10.49% in April (2021). The phenomenon is the fifth straight month of an uptick in WPI inflation.
A low base effect of May last year also contributed to the spike in inflation in May 2021. The WPI inflation stood at (-)3.37% in May 2020.
“The elevated rate of inflation in May 2021 is mainly due to low base effect. These include increased crude petroleum prices, mineral oils viz. petrol, naphtha, diesel, furnace oil, and manufactured products. It is higher to the analogous month of the previous year,” the Commerce and Industry Ministry said.
The manufactured products inflation rose to 10.8% as against 9% in the previous month. In comparison, core inflation jumped to 10% compared to 8.3% in April (2021). Fuel and power inflation jumped by 37.6% during May, against 20.94 percent in April.
The crude oil and prices of other commodities have plunged by global recovery. It indicates the domestic wholesale price index and the effects of supply-side bottlenecks because of the impact of local lockdowns in the month of May.
Inflation in food articles eased marginally to 4.31 percent in May, even as onion prices spiked. Inflation in onion stood at 23.24 percent in May, against (-) 19.72 percent in April.
The RBI, in its monetary policy earlier this month, retained interest rates at record lows and motivated to maintaining an accommodative policy stance to support growth.
The central bank pegged retail inflation at 5.1 percent in the fiscal ending March 2022, with upside beta from higher commodity prices and re-emergence of higher supply constraints amidst the current phase of lockdowns.