Retail inflation accelerates to 4.38% in June, breaches central ​bank’s 4% target | Business

India’s retail inflation rose to 4.38 per cent in June, up from 3.93 per cent in May. The Ministry of Statistics and Programme Implementation (MoSPI) released the inflation data on Monday. Higher prices of petrol, diesel, CNG, along with food items, geopolitical tensions in West Asia and monsoon-related concerns put pressure on prices, pushing up retail inflation.

The Reserve Bank of India is responsible for controlling inflation

Additionally, this marks the first time in 17 months that the country’s retail inflation rate has exceeded the Reserve Bank of India’s 4 per cent target. The Reserve Bank of India has been tasked with maintaining retail inflation at 4% for a five-year period, from April 1, 2026, to March 31, 2031. Additionally, inflation is allowed to remain within an acceptable range of 2 per cent to 6 per cent. 

Food inflation increased in June compared to May

Food inflation stood at 5.32 per cent in June, compared to 4.78 per cent in May. Rural food inflation was 5.45 per cent, while urban prices were 5.09 per cent. Potato prices fell by 20.34 per cent in June, compared to a 23.71 per cent decline in May. Tomato prices fell by 31.92 per cent after rising 48.43 per cent year-on-year in May. A weak monsoon was also a factor in the rise in food inflation in June. Economists have warned that if El Niño adversely impacts crop production in the coming months, price pressures could increase further.

Transport inflation also increased due to the increase in the price of petrol and diesel

Transport inflation rose to 4.31 per cent in June. Supply disruptions caused by tensions in West Asia had a significant impact on crude oil prices, prompting state-owned oil companies to raise petrol and diesel prices four times in May. The rise in petrol and diesel prices further put upward pressure on inflation. Inflation in services related to the transportation of goods was 7.70 per cent.