WPI inflation jumps to 0.79% in May, vegetable prices soar

Rising for the second straight month, wholesale price-based inflation jumped to 0.79 per cent in May with vegetable prices witnessing a double-digit growth. The April WPI-based inflation was at 0.34 per cent and in March it was (-)0.45 per cent while it stood at (-)2.20 per cent in May last year.

Food inflation rose to 7.88 per cent in May as against 4.23 per cent in April, showed a government data today. Inflation in vegetables came in at 12.94 per cent, a sharp rise from 2.21 per cent, a month earlier. Pulses inflation remained stubborn at 35.56 per cent.

Prices of egg, meat and fish paced up by 9.75 per cent and in fruits the rise was 3.80 per cent. However, kitchen staple onion continued to witness decline at (-)21.70 per cent in May. Manufactured products inflation too inched up to 0.91 per cent from 0.71 per cent in April.

The hardening of WPI food inflation follows the trend of retail inflation released yesterday. Retail inflation touched a 21-month high of 5.76 per cent in May mainly due to rising prices of food items.

The hardening of inflation could further dent the chances of a interest rate cut by Reserve Bank in its policy review in the months ahead.

In its policy review earlier this month, RBI had retained January 2017 retail inflation target at 5 per cent, though with an upward bias on account of firming of oil prices and implementation of 7th Pay Commission recommendations.