New Delhi: Annual wholesale price inflation (WPI) accelerated in May to a 14-month high, driven by higher fuel and vegetable prices, government data showed on Thursday. Annual wholesale price index-based inflation rose to 4.43% in May, higher than 3.18% in April. The previous high was in March 2017, when the WPI inflation stood at 5.11%.

According to government data, inflation in food articles was at 1.60% in May 2018. Inflation in vegetables climbed to 2.51% in May while potato prices surged 81.93%. Inflation in fuel and power basket rose sharply to 11.22% in May.

Meanwhile, retail inflation had accelerated to a four-month high of 4.87% due to higher fuel prices and a weak rupee, according to data released earlier this week.

Many economists believe that last week’s rate increase by the Reserve Bank of India (RBI) is the beginning of a gradual tightening cycle as concerns over economic recovery recede and inflationary pressures build though the RBI has kept its policy stance at “neutral" last week.

RBI last week raised its benchmark interest rate for the first time since 2014, by 25 basis points to 6.25%.

May was the seventh straight month in which retail inflation was higher than the RBI’s medium-term target of 4%. The RBI has revised up its inflation forecast to 4.7% for the second half of the current fiscal year ending in March 2019, from the 4.4% seen earlier.

With inputs from agencies