Editorial     

Published: July 15, 2026
Updated: July 15, 2026

Monster of inflation raises its head again

The ordinary Indian seems to be caught between the proverbial Devil and the Deep Sea. Even as geopolitical tensions continue on account of the unresolved US-Iran face-off, mainly over the Strait of Hormuz, rival powerplay marks the Indian political scene. This unfortunate combo is hurting the Indian economy as well as the happiness of the common man.

India’s annual retail inflation rate based on the Consumer Price Index (CPI) stood at 4.38 per cent in June 2026, marking an acceleration from the 3.93 per cent recorded a month earlier in May 2026.

The rise in the inflation rate has been driven by an increase in food prices, which reached 5.32 per cent for the month. Rice, oilseed and pulses prices have shot up as kharif crop sowing has declined. This reduced sowing of key kharif crops is beginning to push up retail prices, signalling fresh inflationary pressure. An inflationary price spiral has started inching up in key monsoon crops such as rice, oilseeds like groundnut seeds and mustard seeds, and pulses like tur, urad and moong in June, as acreage under these crops has declined compared with last year.

Inflation in millets, which is being promoted as an alternative crop to jowar and ragi, is going up as traders and wholesalers hold on to their produce in the hope of getting higher prices later in the year.

India is expected to have below-normal rainfall this year with precipitation just around 90 per cent of the Long Period Average (LPA). According to IMD, rainfall deficiency stood at around 40 per cent, delaying sowing of major crops. While the first week of July witnessed heavy rains, reducing the rainfall deficiency, it has not been able to fill the gap completely. Over 44 per cent of districts are still deficient and 10 per cent are facing a large deficiency of rainfall.

This means more difficult days ahead for the public. With the rise in consumer prices, wholesale prices have not remained behind. Mainly fuel and food have driven wholesale inflation to 9.9 per cent in June. Fuel and power remained the largest contributors, with prices in the category rising 27.4 per cent year-on-year. Although the pace eased from 30.3 per cent in May, wholesale inflation in May has stood at 9.7 per cent.

The rise in wholesale inflation has come even as retail inflation climbs to 4.4 per cent, indicating broadening price pressure across the economy.

Wholesale inflation is expected to remain in the range of 9-10 per cent during July. Similarly, consumer inflation is likely to be around 4.5 per cent in July. This means that if the rains are further delayed, the situation on the price front will be all the more difficult.

Besides food, vegetable and fruit prices have also shown a hardening trend. People who were shocked last year when tomato prices touched Rs 100 a kg were speechless this year as prices of tomatoes have reached Rs 400 a kg.

At this juncture, the government cannot continue to ignore economic problems. The US-Iran war has had a tremendously adverse impact on the Indian economy, and its painful effect has even reached people’s kitchens. This will make the lives of lower- and middle- income people very miserable. New Delhi should wake up and start taking immediate remedial steps to reduce the painful impact of the inflationary price spiral.