India's Retail Inflation Breaches RBI Target for First Time in 17 Months

India's retail inflation quickened to 4.38% in June from 3.93% in May, government data showed, pushing price growth above the Reserve Bank of India's 4% target for the first time in 17 months and stoking expectations that the central bank may soon begin raising interest rates. The reading came in above the roughly 4.2% to 4.3% economists had forecast and was the highest since the consumer price index was revamped at the start of the year, though it remained within the RBI's 2% to 6% tolerance band. Economists attributed the pickup largely to firmer food and fuel prices, partly reflecting the pass-through of an earlier revision in petrol and diesel rates, while lower gold prices offset some of the increase. Several forecasters said the trajectory points higher over the coming months, citing unfavourable base effects and monsoon-related risks to food prices, with some predicting the headline rate could approach 6% later in the year. Market watchers are now debating whether the RBI's Monetary Policy Committee holds steady at its August meeting or moves toward tightening to keep inflation expectations anchored.