The rate of growth of retail inflation in May eased marginally to 8.28 per cent from 8.59 per cent in April.
The retail inflation data, released by the Ministry of Statistics on Thursday, will bring some cheer to the Modi Government that has declared price control a top priority at a time when the Indian Meteorological Department has predicated a rainfall shortfall in the crucial sowing month of July.
The inflation rate in rural areas in May was 8.86 per cent against 9.17 per cent in April, according to the data. The corresponding figure for urban areas is 7.55 per cent in May compared to 7.69 per cent in the previous month.
“The declining trajectory of the Consumer Price Index is a welcome development,” Confederation of Indian Industry Director-General Chandrajit Bannerjee said in a statement.
Generally, if rainfall is deficient by 10 per cent, food inflation rises by 2.8 percentage points, HSBC Global Research, in a report, said recently.
Citi Global Research said, “depending on the severity of rainfall deficiency, there is potentially a 50-90 basis points downside to our GDP estimate of 5.6 per cent for 2014-15, and average inflation could rise half a percentage point from our central estimate of 8 per cent.’’Food prices had jumped over 20 per cent after the 2009 drought as the UPA Government had hiked the minimum support pricefor farmers. Retail inflation averaged 12.3 per cent during the year.