India consumer inflation likely topped RBI's 4% target in June
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India's consumer inflation likely exceeded the Reserve Bank of India's 4% target in June, according to a Reuters poll of economists. The median forecast of 47 economists put annual retail inflation at 4.58%, up from 4.31% in May. The data, due for release on July 12, will be closely watched for clues on the RBI's next policy move.
Poll Details
The Reuters poll of 47 economists conducted July 1-8 projected June retail inflation at 4.58% year-on-year, above the RBI's medium-term target of 4%. Forecasts ranged from 4.10% to 5.20%. The inflation print follows a 4.31% reading in May, which was the first time in seven months that inflation stayed below the 4% mark.
RBI Policy Implications
The Reserve Bank of India kept its key repo rate unchanged at 6.50% in its June policy review, citing upside risks to inflation. Governor Shaktikanta Das emphasized that the battle against inflation is not over, and the central bank remains focused on aligning inflation with the target. The June inflation data will be a key input for the RBI's August policy decision.
Food Price Pressures
Food inflation, which accounts for nearly half of the consumer price basket, likely remained elevated due to heatwaves and uneven monsoon rains. Vegetable prices surged in June, with tomato prices rising over 40% month-on-month in some regions. Analysts at Nomura expect food inflation to stay above 5% in the near term, keeping overall inflation sticky.
CPI Base Year Revision
India has released a revised Consumer Price Index (CPI) series updating the base year from 2012 to 2024, along with changes to methodology, basket composition, and weights. The revision is the first in over a decade and may affect inflation comparisons.
New CPI Series Overhaul
India unveiled a major overhaul of its inflation index with a new CPI series based on 2024 consumption patterns. Statistics Secretary Saurabh Garg announced reduced weight of food, expanded market coverage, and inclusion of e-commerce data.
What's Next
The Ministry of Statistics will release the official June CPI data on July 12. It remains unclear whether the RBI will hold rates steady in August or consider a cut if inflation moderates.
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India consumer inflation likely topped RBI's 4% target in June
