Retail Inflation In August Rises Slightly to 2.07 pc from 1.61 pc
The Reserve Bank of India (RBI) has been mandated by the government to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side
New Delhi: Staying at the central bank’s tolerance band of 2-6 per cent for more than three quarters in a row, India’s headline retail inflation in August rose slightly to 2.07 per cent from 1.61 per cent in the preceding month, mainly due to increase in prices of vegetables, meat and fish, a government data said on Friday.
As per the data released by the National Statistics Office (NSO), the inflation based on consumer price index or CPI was 3.65 per cent in August 2024. “An increase in headline inflation and food inflation during the month of August, 2025 is mainly attributed to increase in inflation of vegetables, meat and fish, oil and fats, personal care and affects, egg,” the NSO said.
The Reserve Bank of India (RBI) has been mandated by the government to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side. It is, however, learnt that base effects, which kept headline inflation at multi-year lows in recent months, probably faded in August and coincided with an acceleration in food price rises, which account for nearly half of the consumer price basket.
As per the NSO data, food prices continued in deflationary territory, falling 0.69 percent in August compared with 1.76 percent in the previous month. “Similarly, cereal inflation declined further to a 44-month low of 2.7 percent, compared with 3.1 percent earlier, while vegetables and pulses remained in deflation for the seventh month running at 15.9 percent and 14.5 percent, respectively,” the data showed.
On the contrary, the data further showed that oil inflation rose further to a four year high of 21.2 percent in August. “Moreover, mustard oil prices were also up by 24.2 percent, whereas refined oil prices were 23.5 percent higher and coconut oil inflation was a whopping 133.1 percent,” the data showed.
However, economists and analysts predict that despite a slight spike in consumer inflation, it will show a fresh low in the next three months. “While the average CPI inflation for FY2026 is now likely to print around 2.6 per cent, October-November 2025 may mark a fresh low, the trajectory subsequently remains upward sloping,” said Aditi Nayar, chief economist, Icra Ltd.
Looking ahead, the Icra said that with the GST rate cuts being implemented on September 22, 2025, the impact of the same on the CPI inflation is unlikely to be material in the ongoing month, given that the average monthly prices are used for computation of the price indices.
“This, in conjunction with the stronger-than-expected GDP growth in Q1 FY2026, and the positive impact of the GST reforms on growth in the later quarters, suggest a status quo for the repo rate in the October 2025 policy review,” Nayar said.
“Despite the healthy trends in kharif sowing, large excess rains, and flooding in some parts of the country in late August 2025 and early-September 2025 could impact the kharif crop yields, and consequently output and prices, and thus, remain a key monitorable,” Nayar added.
