New Delhi : CPI inflation India rose to 2.07 per cent in August, according to data from the Ministry of Statistics, even as food prices continued to decline. The slight increase from July’s 1.61 per cent was still well within the RBI’s tolerance band, keeping overall price stability intact.
Headline inflation in August climbed from 1.61% in July, which had marked the lowest retail inflation level since June 2017. Even with the increase, inflation stayed well within the Reserve Bank of India’s (RBI) target rate of 4%, allowing the central bank to maintain its soft monetary policy to support growth.
Food inflation fell by 0.69% in August, marking the third consecutive month of negative growth. Vegetable prices dropped by 15.92%, while pulses became cheaper by 14.53%. Spices also recorded a 3.24% decline, contributing to the overall fall in food prices.
In contrast, prices of meat and fish, edible oils, eggs, and personal care products pushed overall inflation slightly higher in August compared to July.
Fuel inflation moderated to 2.43% in August from 2.67% in July, while housing inflation slipped to 3.09% from 3.17%. The health sector also recorded a fall, with inflation at 4.40% in August versus 4.57% in July.
Looking ahead, the RBI has projected India’s CPI inflation at 3.1% for 2025-26, supported by strong monsoon rains and healthy kharif sowing that are expected to stabilize food prices.
RBI Governor Sanjay Malhotra recently said the inflation outlook for 2025-26 looks more benign than expected earlier. He attributed the moderation to a favorable base effect, steady monsoon progress, robust reservoir levels, and adequate foodgrain buffer stocks.
However, economists expect CPI inflation to edge above 4% by Q4:2025-26, driven by unfavorable base effects and demand-side pressures from policy measures. Core inflation is likely to remain moderately above 4% during the year, barring major shocks to input costs.
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