India’s consumer price inflation climbed to 4.38% in June, rising from 3.93% in May, marking the eighth consecutive month of acceleration.
The figure surpassed economists’ expectations of a 4.30% rise, according to a Reuters poll, adding pressure on policymakers already navigating a difficult environment.
The U.S.-Iran war and a weakening monsoon season have combined to push food and fuel prices higher across the country.
India’s Ministry of Statistics and Program Implementation said the year-on-year inflation rate based on the All India Consumer Food Price Index stood at 5.32% for June.
Transport inflation rose 4.3% in June, a sharp acceleration compared to the 1.75% increase recorded in May, according to the Ministry’s Monday release.
The Reserve Bank of India kept interest rates unchanged last month but warned that inflation is expected to rise and growth to temper in the financial year ending March 2027.
The central bank forecasts inflation could shoot up to 5.1%, driven by higher fuel prices and the risk of crop shortages caused by El Niño-related weather disruptions.
India imports nearly 85% of its fuel needs and relies on the Strait of Hormuz for around 50% of its crude imports, 60% of its liquefied natural gas, and almost all of its liquefied petroleum gas supplies.
Global oil prices have risen as the United States and Iran contest control of the Strait of Hormuz, one of the world’s most critical energy trade routes.
After a brief ceasefire between Iran and the United States in June, hostilities between the two sides resumed last week, reigniting concerns over supply disruptions.
S&P Global-owned Indian research and rating firm Crisil noted that “following a parched June, the monsoon advanced rapidly, reducing the all-India rainfall deficit from 40% to 15% as of July 8.”
However, the India Meteorological Department has forecast that July rainfall will come in at 6% below the long-period average, leaving agricultural output under threat.
Crisil warned that swings between rainfall scarcity and surplus “can be as disruptive to agriculture as a weak monsoon itself,” influencing sowing decisions, crop health, and ultimately rural incomes.
The Reserve Bank of India has repeatedly emphasised its focus on core inflation, which it has pegged at 4.7% for the current financial year, signalling sustained vigilance over price pressures.