Retail inflation inches up to 2.07 pc in August, but well within RBI target

NEW DELHI: India’s retail inflation, as measured by the Consumer Price Index (CPI), inched up marginally to 2.07 per cent in August 2025 on a year-on-year basis, according to data released by the Ministry of Statistics and Programme Implementation on Friday.

This is an increase of 46 basis points in the headline inflation of August 2025 in comparison to July.

Year-on-year food inflation rate, based on All India Consumer Food Price Index (CFPI) for the month of August, 2025 over August, 2024 is – 0.69 pc (Provisional). Corresponding inflation rates for rural and urban are -0.70 pc and -0.58 pc, respectively.

An increase in headline inflation and food inflation during the month of August, 2025 is mainly attributed to an increase in inflation of vegetables, meat and fish, oil and fats, egg, etc.

The top five major states with high year-on-year inflation for the month of August were Kerala, Karnataka, Jammu and Kashmir, Punjab, and Tamil Nadu, according to the Ministry.

However, the inflation rate is within the Reserve Bank of India’s (RBI) manageable range of 2-6 per cent.

In July, the retail inflation eased sharply to 1.55 per cent, marking the lowest level since June 2017.

Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent.

Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well. The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time, before cutting it for the first time in about five years in February 2025.

Analysts expect inflation to remain under control, allowing the RBI to focus on supporting economic growth. The recent repo cuts were quite an indication.

The inflation outlook, therefore, for the year 2025-26 was revised downwards from the earlier forecast of 4 per cent to 3.7 per cent at the latest RBI MPC meeting.

Assuming a normal monsoon, average inflation for Q1 2025-26 is seen at 2.9 per cent, Q2 at 3.4 per cent, Q3 at 3.9 per cent, and Q4 at 4.4 per cent, with risks evenly balanced. (ANI)