FxWirePro: Daily Commodity Tracker - 21st March, 2022 
India’s consumer price index rose for the second straight month in May on rising prices of food and fuel components, further fading expectations of an easing by the Reserve Bank of India any time soon. The RBI has targeted to reach inflation at five percent by March 2017, to necessitate an easing bias.
India's annual consumer price inflation edged up for the second straight month to 5.76 percent in May, driven by higher prices of food and fuel products, government data showed on Monday. This contrasts with our poll of 10 economists that predicted a median estimate of 5.5 percent and an upwardly revised 5.47 percent in April, compared to prior reading of 5.39 percent.
Consumer prices spiked more than market expectations on the backdrop of a contraction in industrial production in April by 0.8 percent. Asia's third largest economy grew at 7.9 percent in the quarter to March, outpacing China's 6.7 percent growth, and is projected to expand by around 7.75 per cent in the current fiscal year that started on April 1.
The consumer food prices rose 7.55 percent in May after a 6.4 percent jump in April. The acceleration was driven by a 32 percent surge in pulses. Health costs increased 5.1 percent, education 5.85 percent and vegetables 10.77 percent.
Further, the focus now shifts toward the splash of monsoon which has arrived on the south-western coasts of Kerala and is predicted to be above-normal this year. This is likely to dampen food prices after two successive periods of drought and will provide more clarity on Governor Raghuram Rajan’s targeted inflation rate of 5 percent.
"This data does show there is possibly an upside risk to RBI’s inflation target," Bloomberg reported, citing Kunal Kundu, a Bengaluru-based economist at Societe Generale SA.
Rajan kept interest rates on hold this month after five cuts since January 2015, and said "the inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain."
