Key facts
- India's annual retail inflation increased to 4.38% in June.
- This marks the first time inflation has exceeded the central bank's 4% target in 16 months.
- The rise was primarily attributed to higher food and fuel prices.
- A Reuters poll had forecast inflation at 4.3% for June.
India's annual retail inflation rate accelerated to 4.38% in June, surpassing the 3.93% recorded in May and exceeding the 4.3% forecast from a Reuters poll. This marks the first time in 16 months that inflation has breached the Reserve Bank of India's (RBI) 4% target. The increase was primarily driven by higher food and fuel prices, although lower gold prices helped to moderate the overall rise. Sakshi Gupta, Principal Economist at HDFC Bank, noted that the uncertainty surrounding the West Asia conflict and an uneven monsoon continue to pose risks to the inflation outlook. HDFC Bank estimates inflation to average 5.2% for FY27, assuming an average oil price of $80 per barrel.