India Inflation Rate Rises to 18-Month High

The Indian inflation rate surged to 4.38% in June of 2026 from 3.93% in the earlier month, the highest since December of 2024, and slightly above market expectations of 4.3%. Prices rebounded sharply for transportation (4.31% inflation rate) after a marginal deflation rate observed in the previous month, suggesting that the energy shock from the war in the Middle East has started its delayed transmission to Indian consumer prices. Meanwhile, food inflation, which is a large part of the domestic consumer basket, rose to 5.32% from 4.78% in May, amid a 50.4% surge for ginger and a 31.92% increase for tomatoes. In turn, inflation was lower for housing and utilities (1.99%). From the previous month, the Indian CPI rose 1.03%, the most since January 2025.

The inflation rate in India rose to 3.9% in May of 2026 from 3.5% in the previous month, the highest since January of the previous year. Still, it was less than market expectations of 4%, remaining below the Reserve Bank of India's medium-point threshold of 4%. Food inflation, which is a major part of the Indian consumer basket, rose to 4.8% from 4.2% in April, also the highest in 16 months, as the war in the Middle East lifted energy and fertilizer prices that are essential in Indian food production. Meanwhile, price growth was high for personal care, social protection, and miscellaneous goods and services (18.5%) and restaurants and accommodation (5.75%). On the other hand, inflation was muted for transportation (1.75%) and housing and utilities (1.73%). From the previous month, consumer prices rose by 0.8%.

The annual inflation rate in India inched higher to 3.48% in April of 2026 from 3.4% in the previous month, marking the fastest inflation rate in one year, but coming in well below market expectations of 3.8%. It was the fourth reading under India’s new CPI series, which updated the weights of different goods in the index based on the Household Consumption Expenditure Survey conducted two fiscal years ago, increasing the share of non-food items in the domestic consumer basket. Food inflation jumped to 4.2% from 3.87%. Meanwhile, consumer prices refrained from increasing for a second month for transportation (-0.01% vs -0.05% in March) despite the increase in wholesale energy prices, as the surge in benchmarks due to the war in the Middle East and the weaker rupee lifted fuel costs. In turn, prices for accommodation rose slower (1.71% vs 2.88%). From the previous month, consumer prices rose by 0.27%.