NEW DELHI: India’s consumer inflation likely accelerated slightly in May, pressured by elevated food prices, a survey shows. The consumer-price index is expected to have risen 5.5% from a year earlier, according to the median estimate of 12 economists polled by The Wall Street Journal. “Given the uncertainties, the Reserve Bank [of India] will stay on hold, but the stance of monetary policy remains accommodative,” the central bank said Tuesday.
Part of India’s inflation troubles are due to a bounce back in domestic prices of sugar amid expectations that production would decline this year. Shortages in the supply of lentils and seasonal rises in prices of vegetables and fruits have further driven inflation. There is optimism though that food prices will cool if India receives above-average rainfall this year, as the country’s official weather agency has predicted. For now, however, high inflation is expected to weigh against further interest-rate cuts by the central bank.
“The big picture is that inflation is likely to have remained above the RBI’s 5.0% target for March 2017, suggesting that there is little scope for monetary loosening,” research firm Capital Economics said in a note. Meanwhile, India’s wholesale-price index is expected to rise for the second-month running in May. Wholesale prices likely rose 0.5%, the median estimate of 10 economists polled showed. That would be slightly more than the 0.34% increase in April, which followed 17 successive months of decline in prices. The government will announce the consumer prices data Monday and wholesale prices data Tuesday.
