India Inflation June 2023

India: Inflation rises in June on red-hot tomato prices

Inflation came in at 4.8% in June, up from May’s 4.3%. The reading was largely driven by soaring prices for tomatoes due to flooding in areas that produce the crop, such as Andhra Pradesh, Maharashtra and Karnataka. As a result, the rise in inflation was likely a blip, with core inflation only rising slightly in June.

Annual average inflation ticked down to 6.0% in June (May: 6.2%).

Lastly, consumer prices increased 1.01% in June over the previous month, following May’s 0.56% rise. June’s result was the highest reading since April 2022.

Inflation may jump again in the months ahead, as tomato prices have continued to soar so far in July. That said, tomato prices should begin to normalize with the harvest in August. A key factor to watch is the monsoon, with rainfall potentially lower than normal as a result of the El Niño weather pattern, which was declared by the U.S. weather service in early June. Lower rainfall would likely hit agricultural output and thus stoke inflation ahead.

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