India’s retail inflation for the month of June was posted at 4.38%, rising from 3.93% recorded in May. The jump largely came on the back of a rise in the prices of food items. The combined Consumer Food Price Index (CFPI), also known as food inflation, for June was pegged at 5.32%, scaling up from 4.78% reported in the previous month.
The inflation level has now increased beyond the Reserve Bank of India’s (RBI) target of 4%.
Rural retail inflation surpasses urban areas
The Consumer Price Index (CPI) inflation rate in rural areas for June stood at 4.74%, inching up from 4.25% reported in May. Meanwhile, the retail inflation rate in urban areas was lower at 3.92%, against 3.53% reported in the previous month.
Food inflation saw a similar trend. In June, food inflation in rural areas stood at 5.45%, compared to 4.85% reported in May. Meanwhile, the food inflation rate in urban India was posted at 5.09%, rising from 4.66% reported in the previous month.
The combined retail inflation index for June stood at 107, expanding sharply from 105.91 posted in May. Meanwhile, the combined food inflation index also advanced to 107.15 from 105.35.
However, the housing inflation rate for June stood at 2.10%, with rural housing inflation at 2.66%, sharply above the urban housing inflation rate of 1.90%.
Experts weigh in
“Despite the June 2026 inflation print coming in above market expectations, the inflation outlook has become more benign over the past month. This has been supported by a sharper-than-expected decline in crude oil prices, while early July rainfall has partially offset the steep June monsoon deficit,” said Vikram Chhabra, Senior Economist, 360 ONE Asset.
The economist added that the inflation trajectory of the country remains vulnerable to surprises, amid the ongoing risk from the West Asia conflict and the monsoon remaining below normal.
“Our base case currently expects inflation to average around 5% in FY27, which should give the RBI room to remain on pause at the August policy meeting and await greater clarity on the growth–inflation trade-off before deciding its next move,” Chhabra added.
