Retail inflation at 7.04% in May as against 7.79% in April

NEW DELHI: of India retail inflation based on the consumer price index (CPI) at 7.04 percent in May, government data released Monday.
Last month, retail inflation rose to an eight-year high of 7.79% in April.
With this, the retail inflation figure has now remained above the Reserve Bank of India (RBI) upper bound of 2-6%, a bear band for 5 consecutive months.
RBI mainly affects retail inflation when implementing bimonthly policy.
The Reserve Bank’s Monetary Policy Committee (MPC) has been tasked by the government with curbing retail inflation based on the consumer price index (CPI) at 4% (+, – 2%).
Late last month, the government announced a series of changes to the structure of taxes on essential goods and cuts to fuel taxes to help save consumers from soaring prices and combat high inflation.
The spike in prices of wheat, tomatoes, potatoes and other vegetables – vital ingredients in every kitchen – has sent inflation soaring. Crop yields fell due to droughts and heat waves in the north of the country.
Last week, the RBI raised its repo rate for the second time in two months to 50 bps to 4.90% in an attempt to rein in soaring inflation.
It forecasts retail inflation at 7.5% in Q1 (quarter ended June 2022); 7.4% in Q2 and 6.2% in Q3 before falling to 5.8% in Q4.
RBI Governor Shaktikanta Das has said that the Ukraine-Russia war has led to globalized inflation and is posing new challenges as it continues to drag on. It is highlighting current supply chain disruptions that have resulted in soaring global prices of food, energy and commodities.

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