Finance Minister Pranab Mukherjee expects inflation to be in the range of 6.5-7.5 per cent during the current fiscal on back of good monsoon.
Experts said that the rise in inflation, which is mainly on account of food inflation, may not dissuade the RBI to go in for at least a 0.25 percentage points cut in short-term interest rate in its monetary policy review on June 18.
Inflation, as measured by the Wholesale Price Index (WPI), was 7.23 per cent in April. In May last year, however, it was 9.56 per cent.
"I am confident that range of inflation would be around 6.5-7.5 per cent throughout the year. I hope if monsoon is quite good, then it would be possible that this type of pressures would be sorted out," Mukherjee said.
Overall food inflation rose to 10.74 per cent in May, from 10.49 per cent in the previous month. Food articles have 14.3 per cent share in the WPI basket.
The headline inflation number for March was revised upwards to 7.69 per cent, from the provisional estimate of 6.89 per cent.
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During May, manufactured inflation showed some easing and was at 5.02 per cent. It was 5.12 per cent in April. In the 'fuel and power' segment inflation rose by 11.53 per cent on an annual basis. The rate of price rise was 11.03 per cent in the previous month.
"Notwithstanding the elevated inflationary expectations, concerns related to the moderation in economic growth may prompt the RBI to reduce the Repo Rate by 25 basis points in its policy," ICRA Economist Aditi Nayar said. MORE