Several economists, including Citi, are dialing back earlier calls for additional Reserve Bank of India (RBI) rate hikes after reviewing recent inflation data and updated forecasts. While India’s retail inflation rises in June, breaching the RBI’s 4% target for the first time in 17 months, it is not viewed as signaling a sustained acceleration. Sources note that core inflation is cooling, and the annual inflation outlook appears lower than previously expected.
Both reports point to June’s retail inflation print as a temporary breach, but they emphasize that inflation remains within a moderate range when viewed across recent months. Retail inflation averages about 3.9% in the April–June quarter, compared with the 4% target level. With the current trajectory of inflation expected to remain broadly moderate, economists are reassessing the likely path of monetary policy and reducing expectations for further RBI tightening.
Overall, the commentary across sources centers on the gap between a single-month uptick and the broader, multi-month inflation trend, alongside easing core inflation pressures.
