While people have had to bear the brunt of the coronavirus pandemic and resulting lockdowns, inflation has made things worse. Retail inflation has jumped to 6.3 percent in the month of May from 4.23 percent in the month of April.
Inflation based on wholesale prices rose to a record high of 12.94 percent in May, driven by the rise in the prices of crude oil and manufactured goods. The lower base effect also contributed to the sharp rise in WPI inflation in May 2021. In May 2020, WPI inflation stood at a negative 3.37 percent.
This is the fifth consecutive month where inflation based on the Wholesale Price Index (WPI) has seen a hike. In April 2021, WPI inflation was in double digits, reaching 10.49 percent.
In a statement, the Ministry of Commerce said, "the annual rate of inflation based on monthly WPI increased to 12.94 percent in May 2021 (as compared to May 2020) from a negative 3.37 percent in May 2020."
According to the statement: "The higher rate of inflation in May 2021 is primarily due to the lower base effect and a spike in the prices of petroleum products and manufactured products like petrol, diesel, naphtha, furnace oil, etc. compared to the same month last year."
During the period under review, fuel and electricity inflation rose to 37.61 percent (from 20.94 percent in April). The manufactured products inflation stood at 10.83 percent in May compared to 9.01 percent in the previous month. Food inflation eased marginally, reaching 4.31 percent in May. However, there was an increase in the prices of onions during this period.
The RBI kept the interest rates at a record low in its monetary policy earlier this month and said that it was committed to maintaining a lenient policy to boost growth.