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WPI Inflation Surges to 12.94%, CPI inflation at 6.30%


Wholesale price inflation continued to rise unabated, with the index posting 12.94% rise y-o-y in the month of May versus 10.49% in April. While much of the rise in WPI inflation can be explained because of the negative base of the previous year (WPI inflation at -3.37% in May 2020), the WPI inflation was also driven by an uptick in fuel and power inflation both on sequential as well as annual basis. Fuel and power inflation rose to a staggering 37.61% during May, exacerbated by a low base effect. CPI inflation rose above 6% for the month of May’21, breaching RBI’s target band of 4% (+/-) 2% as against 4.23% witnessed in the month of April’21. The uptick in retail inflation was much higher than market expectations and is broad based in nature, while core inflation surged to 6.6% as lockdown related supply disruptions exerted cost-push pressures in the economy.

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