India’s June Inflation Likely Crosses RBI’s 4% Target

India’s retail inflation is expected to have risen above the Reserve Bank of India’s 4% medium-term target in June for the first time in 16 months, according to a Reuters poll of economists. Consumer price inflation is projected to increase to 4.3% from 3.93% in May, driven by higher food and fuel costs, a weak monsoon, and the economic impact of the U.S.-Iran conflict. Official inflation data will be released on July 13.

Economists said the increase is mainly due to rising prices in food, fuel, and selected services rather than widespread inflationary pressure. Concerns over weaker monsoon rains, partly linked to El Niño conditions, could further affect crop production and food prices. Fuel prices have also remained high after multiple price hikes in May, pushing up transportation and logistics costs.

Despite inflationary risks, the RBI kept its key policy rate unchanged at 5.25% last month. Meanwhile, wholesale inflation is expected to remain elevated at 9.15% in June, reflecting higher global commodity and energy prices. Core inflation, which excludes food and fuel, is estimated at 3.95%, suggesting underlying price pressures remain relatively stable.

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