Retail Inflation Data: Retail inflation came down to 7.04 percent in May due to cheaper food items. However, it has remained above the satisfactory level of the Reserve Bank of India for the last five consecutive months. According to data released by the National Statistical Office (NSO) on Monday, the Consumer Price Index-based (CPI) inflation stood at 7.79 percent in April. Retail inflation stood at 6.3 percent in May last year.

Inflation in food articles declined to 7.97 percent in May 2022 from 8.31 percent in the previous month. The Reserve Bank of India in its monetary policy review this month has raised the inflation forecast for the current fiscal from 5.7 percent to 6.7 percent. The central bank mainly considers retail inflation while considering a monetary policy. The government has given the responsibility to the Reserve Bank to keep inflation at four percent with a variation of two percent.

Food inflation has increased in urban areas as compared to April. In April, food inflation in urban areas was 8.09 percent, which has increased to 8.20 percent in May. Let us inform that on May 21, the Central Government had announced a reduction of excise duty on petrol and diesel by Rs.8 and Rs.6 per liter respectively. After this, 6 states had reduced the Value Added Tax (VAT).

It is believed that retail inflation has come down due to a reduction in the cost of freight due to a reduction in excise duty and VAT. However, due to the Russo-Ukraine war, crude oil prices are not taking the name of reduction. Crude oil still remains above $ 120 per barrel. Government oil companies are selling petrol and diesel at huge losses.