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 came in above economists’ expectations of a 4.30% increase, according to a Reuters poll of analysts.
The U.S.-Iran war and a weakening monsoon season have combined to push food and fuel prices higher across the country.
India imports nearly 85% of its fuel needs and relies on the Strait of Hormuz for roughly 50% of its crude oil imports alone.
The Strait of Hormuz, one of the most critical trade routes for global energy supplies, has become a flashpoint as the U.S. and Iran contest for control of the waterway.
After a brief ceasefire between Iran and the U.S. in June, hostilities between the two sides resumed last week, sending global oil prices higher.
India also depends on the Strait for about 60% of its liquefied natural gas and almost all of its liquefied petroleum gas supplies, making it particularly exposed to disruption.
The Reserve Bank of India kept interest rates unchanged last month but warned it expects inflation 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 weather disruptions.
The RBI also pegged core inflation at 4.7% for the same period, signaling sustained pressure on household purchasing power throughout the year.
India, the world’s fastest-growing major economy, faces an additional threat from an erratic monsoon season that has swung between severe drought and heavy flooding.
“Following a parched June, the monsoon advanced rapidly, reducing the all-India rainfall deficit from 40% to 15% as of July 8,” S&P Global-owned Indian research and rating firm Crisil said in a report on Friday.
The India Meteorological Department has forecast that July rainfall will come in at 6% below the long-period average, extending agricultural uncertainty.
Crisil warned that swings between rainfall scarcity and surplus “can be as disruptive to agriculture as a weak monsoon itself,” as it influences sowing decisions, crop health, and ultimately rural incomes.
The Reserve Bank of India has repeatedly emphasized its focus on core inflation as a key policy benchmark going forward.
Prolonged higher energy and food prices risk feeding into core inflation through elevated input costs, transportation expenses, and broader operational pressures across industries.
