Cheapening prices

• May inflation data shows rapid changes in inflation, with retail and wholesale inflation falling to a 75-month low of 2.8% and 0.4% respectively.

• The fall was primarily due to easing food prices and a 12.4% contraction in crude oil and natural gas prices.

• The Reserve Bank of India (RBI) predicted an average inflation of 3.7% for the year, down from 4% in April.

• Analysts suggest retail inflation in June could be as low as 2%, indicating a lag in current data.

• The recent Israel-Iran conflict and slowing monsoon progress could affect fuel and food prices, leading to a fall in overall inflation.

• The escalation of tensions between Israel and Iran could lead to a 40%-50% increase in shipping costs for Indian exports and imports, impacting India’s oil supplies from key sources.

• The monsoon has picked up pace again, but uneven distribution has left agricultural areas parched, indicating uncertainty about food prices’ continued downward trajectory.

• The RBI’s stance to ‘neutral’ indicates readiness to raise or cut interest rates in unpredictable times.