India's Retail Inflation Breaches RBI Target, Hitting 4.38% in June

India's retail inflation quickened to 4.38% in June from 3.93% in May, its highest level in roughly 18 months and above economists' expectations of about 4.30%, according to the Ministry of Statistics. It was the third consecutive monthly acceleration and pushed the headline rate above the Reserve Bank of India's 4% medium-term target for the first time in nearly a year and a half, though still within the central bank's 2-6% tolerance band. Food inflation, a large share of the consumer basket, rose to 5.32%, driven by sharp increases in items such as ginger and tomatoes, while transport inflation jumped to 4.31% as the delayed effects of the Middle East energy shock passed through to pump prices. Economists said further rises are likely, with several projecting inflation could climb toward 5% or higher later in the year amid uneven monsoon rainfall and El Nino risks. That has shifted the debate over policy: while many expect the RBI to hold rates at its August meeting, some now see a growing chance of rate increases in the second half of the fiscal year.