India's Inflation Rises Above RBI's 4% Target for First Time in 18 Months, Governor Cites Supply-Side Pressures

According to RBI Governor Sarthak Mallhotra on Friday (July 17), India's inflation remains above the central bank's 4% target for the first time in 18 months. The governor identified Middle East tensions and weak monsoon performance as key economic risks, attributing recent price pressures primarily to supply-side factors.

The RBI has maintained its benchmark policy rate at 5.25% throughout 2026. Mallhotra stated it is "premature" to discuss tightening monetary policy. Escalating U.S.-Iran hostilities now threaten shipping through the Strait of Hormuz, where roughly half of India's imported crude oil typically transits; India imports approximately 90% of its oil.