India June CPI Highest Since December 2024 as Food Inflation Tops 5%

India's retail inflation rose to 4.38% in June, the highest since December 2024, driven by higher food prices that lifted headline inflation above the Reserve Bank of India's medium-term target of 4%.

Data released by the Ministry of Statistics and Programme Implementation showed Consumer Price Index (CPI)-based inflation rose from 3.93% in May, while food inflation accelerated to 5.32% from 4.78%.

Even with the June increase, average CPI inflation for April-June stood at 3.9%, lower than the RBI's projection of 4.2%.

The latest reading suggests price pressures strengthened toward the end of the quarter but remained broadly in line with the central bank's overall inflation trajectory.

Food continued to account for most of the increase in headline inflation. Rural food inflation rose to 5.45% in June from 4.85% a month earlier, while urban food inflation increased to 5.09% from 4.66%. The data indicate food price pressures have spread across both rural and urban areas despite the progress of the southwest monsoon.

Rural inflation remained higher than urban inflation during the month. Headline inflation in rural areas rose to 4.74% from 4.25% in May, while urban inflation increased to 3.92% from 3.53%. The divergence reflects the larger weight of food items in the rural consumption basket.

Outside food, price pressures remained contained. Housing inflation stood at 2.10%, suggesting the recent increase in headline inflation was largely driven by food rather than a broad-based rise in prices across consumption categories.

Commodity-level data showed inflation remained concentrated in select items. Ginger prices rose 50.41% from a year earlier, while tomato prices continued to remain elevated despite easing sequentially. Precious metals also contributed to inflation, with silver jewellery inflation at 133.21% and gold, diamond and platinum jewellery inflation at 36.82%, tracking higher global bullion prices.

Prices of potatoes, peas, jeera, motor cars and two-wheelers remained below year-ago levels.
The June inflation print also reflects the impact of global developments. Higher crude oil and commodity prices following the conflict inWest Asia have increased transportation and production costs, while volatility in agricultural commodities continues to influence domestic food prices.

For monetary policy, the latest data reinforce the RBI's cautious approach. Although first-quarter average inflation remained below the central bank's forecast, the June reading indicates price pressures are building. The Monetary Policy Committee is likely to closely monitor monsoon progress, food supplies and global crude oil prices before reassessing the inflation outlook. Whether inflation remains close to the RBI's 2026-27 projection of 4.7% will largely depend on the trajectory of food and commodity prices.