India's wholesale inflation rose to a record 15.88% in May due to rising food and crude oil prices.
This is the highest rate of wholesale price-based inflation in the current series launched in 2012.
The inflation based on the wholesale price index (WPI) stood at 15.08% in April. WPI inflation in May 2021 was at 13.11%.
The high rate of inflation in May is primarily due to rise in prices of mineral oils, crude petroleum and natural gas, basic metals, non-food articles, chemicals and food products among others as compared to the corresponding month of the previous year, the Department for Promotion of Industry and Internal Trade says in a statement.
Inflation in food articles rose to 10.89% in May from 8.88% in April. Vegetable inflation was at 56.36%, against 23.24% in April.
During the month, inflation in manufactured products stood at 10.11% compared with 10.85% in April. In the fuel and power basket, prices rose 40.62% in May as against 38.66% in April.
This comes a day after retail inflation fell from an eight-year high of 7.79% in April to 7.04% in May, staying above the Reserve Bank of India's upper tolerance limit for the fifth straight month.
Inflation based on the consumer price index dropped following the government's tax cut on petrol and diesel last month.
In an effort to control rising inflation, the central government on May 21 announced a reduction in the central excise duty on petrol and diesel, ₹200 subsidy on LPG gas cylinders, among other measures. The excise duty cut on petrol and diesel and subsidy outgo on LPG cylinders will cost over ₹1 lakh crore to the central government.
Last week, the Reserve Bank of India (RBI) further hiked its inflation projection for the financial year 2022-23 to 6.7% from 5.7% earlier on the back of rising crude oil prices.
After the recent reduction in excise duties, domestic retail prices of petroleum products have moderated. International crude oil prices, however, remain elevated, with risks of further pass-through to domestic pump prices, the central bank noted.
RBI's estimates indicate that inflation is likely to remain above the upper tolerance level of 6% through the first three quarters of 2022-23. On the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket) of $105 per barrel, inflation is now projected at 6.7% in 2022-23, with Q1 at 7.5%; Q2 at 7.4%; Q3 at 6.2%; and Q4 at 5.8%, predicts the central bank.
The provisional figures of Wholesale Price Index (WPI) are released on 14th of every month with a time lag of two weeks of the reference month and compiled with data received from institutional sources and selected manufacturing units across the country. After 10 weeks, the index is finalised and final figures are released and then frozen thereafter.