Driven by rising food prices, Wholesale Price Index-based inflation rose 0.79 per cent in May, its highest level since October 2014.
This is the second straight month that the WPI print has risen out of the disinflation zone; it rose 0.34 per cent in April. Last May, the WPI had contracted 2.2 per cent.
Food article inflation — which has a weightage of about 15 per cent — rose 7.88 per cent, much higher than the 4.23 per cent in April.
The uptick in WPI came a day after retail inflation hit a 21-month high of 5.78 per cent in May.
It also comes on the heels of a 0.8 per cent contraction in industrial production in April.
The Narendra Modi government is hoping that the Met Department’s predictions of an above-normal monsoon in the June-September period will come true and help keep food prices in check.
Not monsoon-dependent However, Sunil Kumar Sinha, Principal Economist, India Ratings & Research, said that the food items that fuelled inflation in May are largely not dependent on the monsoon.
“Pulses, vegetables, meat, egg, and fish alone contributed 63.4 per cent of food inflation in May,” Sinha observed.
Richa Gupta, Senior Economist, Deloitte in India, said the Wholesale Price Index-based inflation rose in sync with trends witnessed in the retail print.