Jun-26 CPI inflation rose to 4.3% YoY, its highest level in 18 months
Download ReportQuantEco Research || Jun-26 CPI inflation - Moving out of comfort zone
Jun-26 CPI inflation rose to 4.3% YoY, its highest level in 18 months, reflecting the anticipated pass-through of fuel price hikes alongside a broadening of food price pressures, while core inflation remained reassuringly stable. Although the recent correction in global crude prices has eased near-term fuel inflation risks, the outlook remains contingent on evolving geopolitical developments. Greater concern now stems from the monsoon, where an uneven and deficient rainfall pattern has begun feeding into higher prices of perishables, milk and other food items. Early July mandi price trends and weaker kharif sowing suggests that these pressures will intensify. Accordingly, while Q1 FY27 inflation has remained below the RBI's projection, we expect price pressures to strengthen meaningfully from Q2 onwards, driven by weather-related supply disruptions, lagged input cost pass-through and an unfavorable base, leading us to retain FY27 CPI inflation forecast of 5.1%.