Week in Numbers: Tracking India’s Economic Pulse

India’s annual inflation rate, based on the Consumer Price Index (Combined), rose to an 18-month high of 4.38% in June, primarily due to higher food and auto fuel prices. Inflation was 3.94% in May and 2.31% a year earlier.

This marks the first time in 17 months that retail inflation has risen above the Reserve Bank of India’s medium-term target of 4%.

Petrol and diesel prices in the CPI rose 4.3% and 4.9% month-on-month, respectively, while vegetable and pulse prices increased 5.8% month-on-month in June.

Oil-marketing companies raised petrol and diesel prices in four tranches, beginning on May 15. Because the CPI uses the 15th of each month as the reference date, only part of the increase was reflected in the May reading. Given the prospect of a deficient monsoon and rising tensions in West Asia, there is an increasing risk that both food and energy inflation will rise in the months ahead.

Although crude oil prices fell sharply after the US and Iran entered into an interim agreement, they have risen again as tensions in the region have escalated. With the peace deal hanging in the balance, there is uncertainty over whether the RBI’s Monetary Policy Committee will raise interest rates in 2026.

 

India’s annual inflation rate, based on the Wholesale Price Index, rose to a record 9.87% in June from 9.68% a month earlier. This is the highest WPI inflation in the 27-month history of the new series.

Last month, the Department of Promotion of Industry and Internal Trade, which compiles the WPI, introduced a new series with 2022-23 as the base year. Inflation rate in the new series is marginally lower than in the old series. Over the last 25 months, for which data under both series are available, inflation in the new series averaged 0.41 percentage points lower than in the old series.

The increase in WPI inflation in June was driven primarily by higher vegetable prices, which rose 17.4% month-on-month. Vegetable prices surged during the month as monsoon rainfall was 39% below the long-period average at 101.1 millimetres. Rainfall in June was the fifth-lowest for the month since 1901.

However, the increase in WPI inflation was capped by declines in the prices of aviation turbine fuel (-27.0%) and crude petroleum (-20.43%). Crude oil prices fell sharply in June after the US and Iran signed an interim peace agreement. The average Indian crude oil basket declined 21.7% month-on-month to $83.22 per barrel.

Among the three broad groups, the annual inflation rate stood at 7.00% for primary articles, 27.41% for fuel and power, and 7.48% for manufactured products.

WPI inflation remains significantly higher than CPI inflation because state-owned oil-marketing companies have passed through only part of the increase in petroleum product prices. It also reflects manufactures’ inability to fully pass higher commodity costs on to consumers.

India’s annual inflation rate, based on the newly introduced Output Producer Price Index, rose to a 27-month high of 9.57% in June from 9.38% a month earlier. Inflation based on the new Output PPI closely tracked WPI inflation in recent months. Over the last 27 months, the average difference between the two measures has been just 0.07 percentage points.

The Output PPI measures the average change in prices received by producers for their output. It excludes taxes, trade margins and transport margins, but includes subsidies.

The WPI measures changes in the prices of goods traded in the wholesale market, while the PPI measures prices of goods and services as they leave the factory gate. Most advanced economies, including the US and the UK, have shifted from the WPI to the PPI. The government plans to replace the WPI with the Output PPI over the next five years. In addition to the Output PPI, the Department of Promotion of Industry and Internal Trade has introduced a monthly Input PPI for the manufacturing sector and seven quarterly service PPIs.

 

 

India’s merchandise trade deficit widened to a five-month high in June as imports grew twice as fast as exports. The trade deficit rose to $30.43 billion in June from $27.95 billion in May and $19.10 billion a year earlier. Imports rose 31.0% year-on-year to $70.84 billion, while exports increased 15.5% to $40.41 billion.

Import growth was driven by higher imports of crude and petroleum products and electronic goods. Imports of crude oil and petroleum products rose 40.1% to $19.33 billion, while those of electronic goods increased 58.8% to $13.36 billion.

Export growth in June was driven primarily by higher shipments of engineering goods, electronic goods, and gems and jewellery. Exports of engineering goods rose 20.7% to $11.48 billion, while electronic goods exports increased 18.9% to $4.93 billion. Gems and jewellery exports rose 34.6% to $2.41 billion.

Growth in gold imports moderated to 7.1%, while growth in petroleum product exports slowed to 9.2%. The moderation may have been due to the increase in import duty on gold and the imposition of a windfall tax on exports of petrol, diesel, and aviation turbine fuel.

India recorded a current account deficit of $2.0 billion in May compared with a surplus of $0.7 billion a year ago. The deficit was mainly due to the wider merchandise trade deficit during the month. The current account recorded a surplus of $4.7 billion in April.

The capital account recorded a deficit of $2.4 billion in May, compared with a surplus of $3.7 billion a year ago, pushing the overall balance of payments to a deficit of $4.4 billion compared with a surplus of $4.4 billion. The capital account deficit reflected outflows of $0.1 billion from foreign direct investment and $4.7 billion from foreign portfolio investment.

The current account recorded a surplus of $2.8 billion in April-May, compared with a deficit of $4.1 billion a year ago. The capital account recorded a deficit of $13.8 billion in the first two months of 2026-27 compared with a surplus of $9.0 billion a year ago.

Growth in automobile dispatches remained robust, posting double-digit gains for the eighth consecutive month in June. Total automobile dispatches rose 19.7% year-on-year to 2.32 million units, driven by broad-based growth across segments.

Passenger vehicle dispatches increased 24.1% year-on-year to 388,144 units in June, while two-wheeler dispatches rose 18.6% to 1.85 million units. Three-wheeler dispatches increased 26.1% to 77,951 units. Automobile dispatches rose despite higher petrol and diesel prices introduced in May.

Within the passenger vehicle segment, utility vehicle dispatches rose 19.9% to 217,228 units, while car dispatches increased 15.7% to 98,610 units. Within the two-wheeler segment, motorcycle dispatches rose 6.4% to 1.06 million units, while scooter dispatches increased 39.1% to 744,823 units.

Automobile production rose 27.4% year-on-year to 3.02 million units in June, suggesting manufacturers expect demand to strengthen in the coming months.

 

The unemployment rate among youth in the country rose to a record high in June, driven primarily by a sharp increase in unemployment among young women. The youth unemployment rate rose to 16.2% in June from 15.9% a month earlier, while unemployment among young women increased to a record 20.7% from 18.9%. The youth unemployment rate was the highest since the National Statistics Office began the survey in January 2025.

Urban youth unemployment rose to 18.2% in June from 17.5% a month earlier, while the rural youth unemployment rate was unchanged at 15.1%.

The overall unemployment rate remained at 5.5% in June after touching an 11-month high in May. The urban unemployment rate rose to 6.6% from 6.4%, while the rural rate eased to 5.0% from 5.1%.

Meanwhile, the overall labour force participation rate — the share of the population that is employed or actively seeking work — remained steady at 54.4% in June.

 

 

India’s coal production rose for the first time in four months in June, increasing 1.4% year-on-year to 80.09 million tonnes. Coal dispatches rose 7.0% to 90.01 million tonnes. Coal demand in recent months has been dampened by lower thermal power generation and higher renewable energy output. However, coal dispatches to the power sector increased 4.6% year-on-year to 70.92 million tonnes in June. The power sector accounts for about 80% of coal dispatches.

 

 

 

India’s foreign exchange reserves rose marginally even after the government and the Reserve Bank of India announced measures to attract foreign exchange inflows. The reserves increased by $960 million to $675.16 billion in the week ended July 10. Foreign currency assets increased by $930 million to $546.51 billion, while gold reserves increased by $30 million to $105.23 billion. The Reserve Bank of India and the government have announced several measures to attract foreign flows, including a concessional forex swap facility for public sector units raising external commercial borrowings, and a facility covering hedging costs for banks mobilising foreign currency non-resident deposits.

 

Reservoir storage increased marginally but remained below historical trends. As of July 16, live storage in reservoirs stood at 63.25 billion cubic metres, up 3.81 billion cubic metres from a week earlier. The live storage accounted for 34% of the total capacity. However, the storage level was 39% lower than a year ago and 2% below the 10-year average. Reservoir storage levels typically begin rising in June.

 

The southwest monsoon rainfall weakened again after a brief revival in early July. As of July 17, cumulative rainfall over the country was 24% below normal at 238.0 millimetres. Of the country’s four regions, rainfall was 24% below normal over northwest India, 36% below normal over east and northeast India, 28% below normal over the south peninsula, and 13% below normal over central India.

The southwest monsoon rainfall was 38% below normal in June and 10% below normal so far in July.

Kharif sowing remained below last year’s level due to weak southwest monsoon rainfall. The total area sown under kharif crops fell 6.0% year-on-year to 65.82 million hectares as of July 17. Rice acreage, which typically accounts for about one-third of the total kharif cropped area, declined 0.8% to 16.64 million hectares. Sowing of pulses fell 15.1% to 6.92 million hectares, while oilseed acreage fell by 5.5% to 14.71 million hectares. Sugarcane sowing, which is almost complete, rose 1.5% to 5.76 million hectares. The area sown so far is equivalent to 60% of the normal kharif area of 110.45 million hectares.

 

Coming up

• July 20: Index of Nine Core Industries for June
• July 24: HSBC India Flash PMI for July
• July 28: Index of Industrial Production for June 

Tailpiece
The government will release a revised series of the Index of Core Industries with 2022-23 as the base year. The new series will comprise nine items, with iron ore added to the index. However, the combined weight of the nine core industries in the Index of Industrial Production will fall to 32.88% from 40.27% in the earlier series.