For policymakers in India, the inflation scenario is starting to turn troublesome, with both consumer and wholesale prices showing notable increases. Government data released on Tuesday showed the wholesale index 9.9% higher last month than in June 2025, a day after India’s level of retail prices was reported to have risen 4.4% over the same time period to touch a 17-month high.
Broadly, to blame are supply disruptions caused by the West Asia conflict followed by early intimations of how rainfall vagaries impact food prices. Off-and-on traffic through the Strait of Hormuz, a chokepoint for global energy supplies, caused bulk prices of mineral oils to jump 27% in June after May’s 30% rise.
Meanwhile, food price pressures increased at both the wholesale and retail levels. Though retail inflation is lagging wholesale, it now exceeds the Reserve Bank of India’s (RBI) 4% target and could rise more.
To be sure, RBI did flag this incline last month; it raised its inflation projection for 2026-27 to 5.1% from 4.6%. If renewed hostilities between the US and Iran choke supplies, that number might move closer to its 6% tolerance limit. In such an eventuality, RBI might need to re-examine its policy stance.