India's May wholesale prices rose 2.61% Y/Y, most in over a year

Customers buy fruits and vegetables at an open air evening market in Ahmedabad

NEW DELHI (Reuters) -India's wholesale prices rose 2.61% in May, the most in more than a year, mainly driven by food items, government data showed on Friday. May inflation was higher than the 2.5% expected by economists polled by Reuters and up from 1.26% in April.

Food prices rose 7.4% on year compared with an increase of 5.52% in April, while prices of vegetables were up 32.42% on year against a 27.94% rise in the previous month.

Manufactured product prices rose 0.78% year-on-year against a 0.42% drop in the previous month. Fuel and power prices rose 1.35% compared with a 1.38% rise in April.

WPI inflation for March was revised to 0.26% from 0.53% earlier.

India's retail inflation rate eased slightly in May to 4.75%, partly helped by a fall in fuel prices although food prices remained elevated, government data showed on Wednesday.

Food inflation is worrying and that will put pressure on retail food inflation, said Paras Jasrai, an economist at India Ratings & Research. The retail food inflation is expected to be above 8% in June, he said.

Food inflation could decline if forecasts of a normal monsoon play out.

Well-distributed rainfall would be crucial to support the timely onset of summer crop sowing across Indian states, said Aditi Nayar, an economist at ICRA.

Summer rains from June to September are critical for farmers to plant crops such as rice, cotton, soybeans, and sugarcane.

(Reporting by Nikunj Ohri and Manoj Kumar; Editing by Janane Venkatraman)