India’s Wholesale Inflation Climbs for 3rd Month, Hits 2.61% in May 2024

India’s wholesale inflation surged for the third consecutive month in May, reaching 2.61% year-on-year, fueled by a significant rise in food article prices, particularly vegetables. This marks a sharp increase from the previous month’s reading of 1.26% and signifies a notable shift from deflationary territory observed in May 2023 (-3.61%).

The Ministry of Commerce & Industry attributed the inflation uptick primarily to costlier food items, processed food products, crude oil & natural gas, and manufactured goods. According to the data, inflation for food articles shot up to 9.82% in May compared to 7.74% in April. Vegetable prices witnessed a substantial climb, with inflation reaching 32.42% from 23.60% the prior month. Onion and potato prices saw a particularly steep rise, inflating by 58.05% and 64.05% respectively. Pulses also experienced a significant price increase, with inflation rising to 21.95% in May.

While fuel and power inflation remained marginally lower at 1.35% compared to 1.38% in April, inflation in manufactured products climbed to 0.78% from a negative 0.42% in the previous month.

It’s important to note that this rise in wholesale inflation contrasts with the retail inflation data for May. The Reserve Bank of India (RBI) primarily focuses on retail inflation figures when formulating monetary policy. Earlier this week, data revealed that retail inflation had eased to a 1-year low of 4.75% in May. The RBI also opted to maintain interest rates unchanged for the eighth consecutive time this month.