Consumer Price Inflation for May 2014 was at 8.28%, a tad lower than April’s 8.59%.
From a component level, we find that Food remains high at +9.3%, but Fuel has moderated. (Largely because diesel price increases were kept on hold during elections) Transport costs are at +7.2%, higher than recent months.
And the rural folks saw inflation falling a little more than the urban folks. But the impact is not huge:
My take: Inflation stays low, triggers feeling that interest rates will come down. This is positive for us in general, but the risks are a bad monsoon. We currently have 44% less rains than normal, but this situation can change dramatically in the next few days.
