After the consumer price index (CPI) jumped the 6.3 per cent mark in May and wholesale inflation reached a record of 12.94 per cent, economists at Swiss brokerage UBS Securities have warned that the country is facing more upside risks on the inflation front that is set to average at 5 per cent for the year.

Rising prices of edible oils and protein-rich items pushed retail inflation to a six-month high of 6.3 per cent in May, violating the comfort level of the Reserve Bank of India and thus providing a reduction in interest rates, a difficult proposition in the near term. Led by petrol price, which has crossed the Rs 100-mark in many states, wholesale inflation accelerated to a record 12.94 per cent in May. At the same time, crude oil has crossed $70 a barrel on account of rising prices of crude oil and manufactured goods due to spike in commodities and the low base of last year due to the lockdown.

While the consumer price index (CPI) rose from 4.23 per cent in April to a six-month high of 6.3 per cent, food inflation soared from 1.96 per cent to 5.01 per cent in May. The previous high in retail inflation was 6.93 per cent in November 2020. In May 2020, the WPI inflation was 3.37 per cent, and in April 2021, it hit double digits at 10.49 per cent.