NEW DELHI, INDIA – JULY 9: People are seen crossing a flooded road after heavy rains at Ghazipur Sabzi Mandi on July 9, 2026 in New Delhi, India. (Photo credit: Raj K Raj/Hindustan Times via Getty Images)
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India’s consumer price inflation rose to 4.38% in June from 3.93% in May as the US-Iran war and weak monsoon pushed up food and fuel prices, increasing cost pressure.
The headline inflation rate exceeded economists’ expectations for a 4.30% rise, according to a Reuters poll.
The year-on-year inflation rate based on the All India Consumer Food Price Index (CFPI) was 5.32 per cent in June, India’s Ministry of Statistics and Program Implementation said in a statement on Monday. Transport inflation rose 4.3% in June, faster than the 1.75% rise in May, it said.
India’s central bank last month kept interest rates unchanged, but said it expected inflation to rise and growth to slow in the fiscal year ending March 2027.
The Reserve Bank of India expects inflation to reach up to 5.1% as consumers pay higher fuel prices and the country faces the risk of crop shortages caused by weather-related disruptions caused by El Nino this year. Core inflation was expected to be 4.7% over the same period.
After a brief ceasefire between Iran and the United States in June, hostilities between the two countries resumed last week.
Global oil prices are rising as the United States and Iran vie for control of the Strait of Hormuz, one of the most important trade routes for global energy supplies.
India is the world’s fastest growing major economy and one of the countries most vulnerable to supply disruptions caused by the Iran war. The South Asian country imports almost 85% of its fuel needs and relies on the Strait of Hormuz for about 50% of its crude oil imports, 60% of its liquefied natural gas, and nearly all of its liquefied petroleum gas supplies.
The South Asian country continues to face the risk of El Niño this year. India still faces the prospect of a weak monsoon this year, despite heavy rains that have caused flooding in many parts of the country over the past two weeks.
“After a dry June, the monsoon has progressed rapidly, reducing the rainfall deficit across India from 40% to 15% as of July 8,” Indian research and ratings firm Crisil, part of S&P Global, said in a report on Friday.
However, the India Meteorological Department (IMD) has predicted that July rainfall will be 6% below the long-term average.
These fluctuations between deficit and surplus rainfall “can be as disruptive to agriculture as a weak monsoon itself,” Crisil said, as it affects sowing decisions, crop health and ultimately rural incomes.
India’s central bank has repeatedly emphasized its focus on core inflation. Although core inflation is not yet a major concern, longer-term increases in energy and food prices will increase core inflation through higher input, transportation and operating costs.
