The wholesale price-based inflation accelerated to a record high of 12.94 per cent in May, on rising prices of crude oil and manufactured goods. Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent.
This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49 per cent. “The annual rate of inflation, based on monthly WPI, was 12. 94 per cent for the month of May, 2021 (over May, 2020) as compared to (-) 3.37 per cent in May 2020.
“The high rate of inflation in May 2021 is primarily due to low base effect and rise in prices of crude petroleum, mineral oils viz. petrol, diesel, naphtha, furnace oil etc. and manufactured products as compared to the corresponding month of the previous year,” the Commerce and Industry Ministry said.
Inflation in fuel and power basket spiked to 37.61 per cent during May, against 20. 94 per cent in April. In manufactured products, inflation stood at 10.83 per cent in May, against 9. 01 per cent in the previous month. However, inflation in food articles eased marginally to 4.31 per cent in May, even as onion prices spiked. Inflation in onion stood at 23.24 per cent in May, against (-) 19.72 per cent in April.
The RBI in its monetary policy earlier this month kept interest rates unchanged at record lows and committed to maintain an accommodative policy stance to support growth. RBI pegged retail inflation at 5.1 per cent in this fiscal ending March 2022, with upside risks from higher commodity prices and re-emergence of higher supply constraints amidst the current phase of lockdowns. Retail inflation data for May is scheduled to be released later in the day.