In numbers: Gold, silver, mobile bills, airfare to pinch Indian wallets

India’s non-food inflation climbed to a 23-month high of 4.3 percent in June despite a dip in retail inflation in the same month. Inflation for non-food items and services was 4.1 percent in May. Experts say prices of non-food items are likely to stay elevated in the coming months as most segments continue to pass on higher input costs to the consumers. “The rate may not cross 4.5 percent, but will remain in this range,” says Madan Sabnavis, chief economist at Bank of Baroda. Meanwhile, core inflation, at 4.5 percent in June, has steadily risen to its highest since September 2023. India’s overall retail inflation dropped to a six-year low of 2.1 percent in June largely due to a fall in food prices, which slid into deflation for the first time since January 2019.

Non food inflation exceeded retail inflation, for the first time since June 2023, in March this year and has continued upwards since. Meanwhile, food prices slid into deflation for the first time since January 2019. Core inflation, which excludes volatile food and fuel components, has remained over 4% since January this year.

Inflation in precious metals and ornaments remained high. Beer prices also showed a significant spike, which is notable for a commodity whose inflation has largely remained under 4% since April 2023. In comparison, railway fare, family planning devices and household appliances saw a considerable drop in prices in June. "FMCG companies have started increasing prices after holding on for the last 2 years," says Madan Sabnavis, chief economist Bank of Baroda.

While prices of fuel and light have largely remained lower than headline inflation in the past year, it marginally exceeded retail inflation in June. Experts believe that since the Q1 inflation figures are close to the RBI’s forecast (revised to 2.9% for Q1FY25), a further downward revision of inflation for FY26 is unlikely. “Even if there is a change made this time, it may not be really significant and be not more than 0.1-0.2%,”says Sabnavis.

While a majority of the households do not expect prices of non food items to ease in the coming months, experts believe that overall inflation is expected to remain low in July due to the base effect before rising sequentially.