Published: Thu, June 14, 2018
Money | By Ralph Mccoy

Inflation declines to 11.61% in May

Inflation declines to 11.61% in May

The RBI in its bid to tighten inflation, increased repo rate last week, for the first time in more than four years.

Inflation rate reduces by 0.87% from April.

It also said food prices dragged on inflation, specifically products such as sugar, jam, syrups, chocolate and confectionery.

Core Inflation stood at 10.7% in May.

Analysts polled by Reuters had forecast May's annual increase in the consumer price index at 4.83 per cent, compared with April's provisional 4.58 per cent. The CPI measures the average change over time in prices of goods and services consumed by people for day-to-day living.

"This is 0.87% points less than the rate recorded in April 2018 13.34% and represents the sixteenth consecutive disinflation since January 2017", the report read.

The committee which sets interest rates at the Bank of England will consider the latest inflation figures when it meets next month. It was up by 0.11% when compared with 0.87% recorded in April.

Mike Hardie, head of inflation at the ONS said: "Recent large rises in the cost of crude oil have fed through to prices paid by consumers at the pump". This was caused by the increase in price of potatoe, yam and other tubers, fish, bread and cereals, Oil and fats, vegetables, coffee, tea and cocoa, Meat, Milk, cheese and eggs.

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"Adjusted for inflation, these prices are not out of line with where we've seen oil prices for the last decade or two". Prices have risen around 60 percent over the previous year .

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"With both core and headline inflation only likely to face greater upside pressure from various factors in the coming months, we continue to expect one more 0.25 per cent rate hike from the RBI".

The NBS report further stated that the urban inflation rate dropped to 12.08 per cent year-on-year in May from 12.89 per cent recorded in April, while the rural inflation rate also dropped to 11.20 per cent in May from 12.13 per cent in April.

It stated the percentage change in the average composite CPI for 12 months period ended May over the average of CPI for the previous 12 months period.

In the same vein, the urban index rose by 1.10% in May 2018.

On Tuesday, the ONS said wage growth slowed to 2.8% in the three months to April from 2.9%.

For Rural Index, it also rose by 1.08%, from the recorded figure of 0.82% in the previous month of April.

Air fares, which were influenced by the early timing of Easter this year, registered annual inflation of 8.2 per cent, having fallen by 7.9 per cent in the prior month. Kogi followed with 9.07% while Delta recorded 9.22% on a year-on-year all item basis in May, 2018.

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