India's May CPI inflation may have topped 5% again

After a temporary dip below 5% in April, May CPI likely jumped to 5.25% y/y. Higher food prices (especially of fruits, pulses and milk) likely pushed headline CPI higher. Crop damage due to unseasonal rainfall drove up retail prices of pulses by 3.5-12.5% m/m, assumes Standard Chartered. Prices of vegetables also increased 8% m/m. Potato prices rose 8.5% in May after falling for eight months in a row and onion prices increased 6% m/m (-3% prior), notes Standard Chartered. The double-digit increase in retail fuel prices - reflecting an uptick in global oil prices - added to inflationary pressures. Higher inflation in May versus April is unlikely to surprise the market, as it is partially expected. Furthermore, expectations for another rate cut will likely be muted given the Reserve Bank of India's recent policy rate cut.