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Charts & Analysis

Consumer Price Inflation Jumps Back Up To 5% in May 2015

Consumer Price Inflation for May 2015 rose to 5%, rising suddenly after two months of a drop.

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Components showed rising inflation in:

  • Fuel (we saw two retail fuel price increases in May, and guessed this last month)
  • Education, Medical costs
  • Consumption: Personal Care and Household Items

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Food remains benign on the inflation front and here the only fear is of a bad monsoon.

There has been an uptick in Rural and Urban inflation.

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“Core Inflation” has risen after a long time

If you take out the impact of food and fuel, the inflation index has risen suddenly:

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Our View

While inflation has gone up, we don’t think this is a big deal just yet because the next few months have seen a sudden move up last year on the index.

However the rise in “core” inflation is surprising. In any case, RBI isn’t going to drop rates for a few months at least. They will probably have rising inflation to add to their woes.

Overall, this is a “so-so” report – the only fear is the “Core” piece here.