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So, FilterCoffee brings you inflation data every month. Today, before jumping into what happened, let's understand why it's important.
Inflation tells us how fast the prices of everyday things like food, rent and transport are rising. It affects your monthly budget and also influences whether the RBI cuts or raises interest rates.
What’s going on: India's retail inflation rose to 4.38% in June, up from 3.93% in May.
More importantly, it crossed the RBI's 4% target for the first time in 18 months. The reading also came in higher than what economists were expecting.
What's pushing prices up: the biggest culprit was food inflation, which climbed to 5.32%.
Prices of vegetables, cereals and other food items remained elevated, while eating out also became more expensive. Restaurant and accommodation inflation jumped to 6.91%, and prices of clothing and footwear also inched higher.
Inflation picked up in both rural and urban India, showing that price pressures are becoming more broad-based.
A few bright spots: not everything became more expensive. Inflation eased slightly in housing and healthcare, while price increases in personal care products also moderated. Even though gold prices remained high, silver jewellery continued to see the sharpest price rise among major items.
Zoom out: now that inflation has moved above that mark, the central bank is likely to remain cautious about cutting interest rates.
Largely, RBI is still widely expected to leave interest rates unchanged at its policy meeting scheduled for August 3–5.
