India's Retail Inflation Climbs to 4.38%, Breaching the RBI Target for the First Time in Months

India's retail inflation accelerated to 4.38% in June from 3.93% in May, government data released on 13 July showed, pushing the rate above the Reserve Bank of India's 4% median target for the first time since the consumer price index was revamped in January. The reading exceeded a consensus forecast of about 4.3% and marked a third consecutive month of acceleration. Food inflation was the primary driver, rising to 5.32% from 4.78%, with ginger prices up more than 50% and tomatoes up nearly 32% year on year, even as potatoes and peas remained in deflation. Transport inflation rebounded to 4.31% as the pass-through from higher petrol and diesel prices took effect, reflecting the delayed transmission of the Middle East energy shock. Rural inflation at 4.74% ran well ahead of the urban rate of 3.92%. Economists were divided on the implications: several expect inflation to firm toward 5% or above over the coming months on an uneven monsoon and El Nino risks, and most anticipate the Monetary Policy Committee will hold rates at its August meeting while some assign meaningful probability to hikes later in the fiscal year.