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India CPI rises to 4.38% in June, above RBI target

June inflation accelerated to 4.38% from 3.93% in May, increasing pressure on the RBI to turn more hawkish despite its last steady repo rate of 5.25%.

Reported · Written up by our desk · Central Banks

India’s annual consumer inflation rose to 4.38% in June, according to data released by India’s Ministry of Statistics and Programme Implementation, breaching the Reserve Bank of India’s medium-term target range for the first time in 16 months.

The June reading came in above the 4.3% forecast and accelerated from 3.93% in May, with the report citing rising food and fuel costs linked to geopolitical tensions in the Middle East and a delayed monsoon.

The inflation print adds renewed pressure on the RBI, which is tasked with keeping headline inflation at 4% within a tolerance band of 2% to 6%.

Forexlive notes the RBI held its key repo rate steady at 5.25% at its last policy meeting, but the faster-than-expected rise in prices may lead policymakers to adopt a more hawkish stance in upcoming meetings as energy price shock risks remain from ongoing hostilities.

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