The year-on-year (YoY) headline CPI inflation (base year: 2024) hardened to 4.4% in June 2026 from 3.9% in May 2026, slightly above ICRA’s forecast (+4.3%). The acceleration over the previous month was primarily led by the food and beverages (F&B), transport (reflecting price hikes in petrol and diesel), and restaurants and accommodation services (amid cooking fuel price hikes) divisions. ICRA projects the CPI inflation to rise further to ~4.6% in July 2026, underpinned by the seasonal sequential uptick in food segment and continued pass-through of high energy prices in non-food segments, even as precious metal prices have eased in the month so far. Owing to heavy rains in early-July 2026, the rainfall deficit in Southwest Monsoon season narrowed to 19% till July 13 from 40% at end-June 2026, which would augur favourably for kharif sowing. However, adequate rainfall during July-August remains crucial to support sowing and output, and contain inflationary pressures in the ongoing fiscal.

EXHIBIT: YoY trends in headline All-India, Urban and Rural CPI Inflation (%)

Source: NSO; CEIC; ICRA Research