India's Wholesale Price Index (WPI)-based inflation surged to a 15-month high of 2.61% in May.

The positive rate of inflation in May 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum and natural gas, mineral oils and other manufacturing, the ministry of commerce and industry says in a statement.

In April, wholesale inflation stood at 1.26%, up from 0.53% in March 2024 and 0.20% in February 2024.

The wholesale inflation in primary articles surged to 7.2% year-on-year in May compared with 5.01% in April.

The rate of inflation based on WPI Food Index increased from 5.52% in April 2024 to 7.40% in May 2024.

This comes two days after India's retail inflation dipped to a 12-month low of 4.75% in May, down slightly from April's 4.83%, according to government data. The consumer price index inflation has remained below 5% for three consecutive months since March. The significant reduction in the headline inflation rate was primarily due to a decline of 3.83% in the fuel and light category in May. In contrast, the inflation rate for food and beverages remained unchanged at 7.87% compared to April.

Earlier in June, Reserve Bank of India governor Shaktikanta Das said retail inflation is expected to fall below 4% in the second quarter of 2024-25 but that may not lead to a rate cut because inflation is again expected to rise in the succeeding quarter to 4.7%.

The last mile of our journey towards 4% inflation target is pretty sticky, said the RBI governor during the post monetary policy press conference. “When we have confidence that inflation will stick to 4% and not go up, then we will act on further monetary policy action,” Das said.

Inflation has to align with the 4% target and be there on a durable basis, he added.

The monetary policy committee (MPC) expects inflation to be at 4.5% in 2024-25 with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5% if the monsoon is normal. The MPC decided by a majority of 4 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

Inflation continues to moderate, mainly driven by the core component which reached its lowest level in the current series in April 2024. Food inflation, however, remains elevated. Persisting food inflation pressures offset the gains of disinflation in core and deflation in the fuel groups. Despite some moderation, pulses and vegetables inflation remained firmly in double digits. Vegetable prices are experiencing a summer uptick. The deflationary trend in fuel was driven primarily by the LPG price cuts in early March.

While inflation is easing, the final leg of this disinflation journey may be tough, said Das.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.