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Below are Perspective on CPI numbers by Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services.

“Inflation unexpectedly rose in May to 6.3% (Emkay: 5.35%) from 4.29% earlier, with pain felt across the board. In conjunction with a low base, sequential acceleration across food and core segments drove inflation higher.  As seen in WPI inflation, CPI food inflation was up sharp 5% partly led by seasonal factors while fuel inflation crossed double digits amid transmission of higher international prices to retail level. Core inflation also saw broad-based increase, making the YoY print high at 6.6%. Rising input costs and higher wholesale inflation will concern the MPC, especially as today’s high inflation print would easily push up the average inflation for FY22 to 5.5%+ much higher than RBI’s estimate of 5.1%.  However, they may still choose to look through the spike in inflation in the near term , with the monetary reaction function currently hinging more on growth revival becoming sustainable.”

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