For the second straight month this fiscal, retail inflation remained at double-digit level in May. This may have prompted the RBI to leave policy rates unchanged on Monday, say economy watchers.
The All India Consumer Price Index, which is main gauge for retail inflation, was up at 10.36 per cent in May, official data released by the Central Statistics Office showed. This was higher than the 10.26 per cent year-on-year increase seen in April.
Retail inflation in March stood at 9.38 per cent.
Vegetable, edible oil and milk prices continue to be the main source of worry for both the consumers as well as policymakers.
The maximum spurt in prices for May was seen in vegetables at 26.39 per cent, followed by edible oils at 18.21 per cent and milk and its products by 13.74 per cent, year-on-year.
Provisional inflation rates for rural and urban areas stood at 9.57 per cent and 11.52 per cent, respectively, in May. Inflation rates (final) for rural and urban areas for April this year were 9.67 per cent and 11.10 per cent, respectively.
The Wholesale Price Index (WPI)-based inflation in May stood at 7.55 per cent.
No room for rate cut
With the divergence between the two indices persisting, there was little room for the RBI to look at any aggressive rate cut, say economy watchers.