Mumbai : According to to a Reuters poll of economists, inflation likely edged up to 5.52 percent in May. Higher food and fuel prices pushed Indian inflation up in May, Good monsoon rains would temper it in the coming months and give the central bank room to ease further.
The survey predicted annual consumer price inflation nudged up to 5.52% in May from April's 5.39%. Should that prove correct, it would put inflation further above the Reserve Bank of India's target of around 5% by March 2017 and 4% over the medium term and mean it is uncomfortably close to January's 17-month high of 5.69%.
Shubhada Rao, chief economist at Yes Bank says "We've seen incremental price pressures build up in the month of May on account of vegetable prices, pulses and edible oils. In addition, fuel prices have also moved up. RBI Governor Raghuram Rajan also struck a more cautious tone at the bank's policy meeting on Tuesday than he had in April. Rajan said the RBI was looking for room to ease and listed a good monsoon and astute management of stocks by the government as prerequisites to offset inflationary pressures ahead. The latest Reuters survey of over 20 economists also showed industrial output grew 0.5 percent in April, faster than 0.1 percent the month before. Economists in the poll expect India's trade deficit to have widened to USD 5.40 billion in May, up from a previous USD 4.84 billion.