Retail Inflation Increases Slightly To 2.07 Per Cent In August, Vegetable Prices Remain Lower

India’s retail inflation ticked up in August after plunging to an eight-year low in July, but remained comfortably inside the Reserve Bank of India’s (RBI) 2-6 per cent tolerance band, according to official data released on Friday (12 September).

Consumer prices, measured by the Consumer Price Index (CPI), rose 2.07 per cent year-on-year in August, compared with a revised 1.61 per cent in July and 3.65 per cent a year earlier, the Ministry of Statistics and Programme Implementation said.

Economists had expected 2.2 per cent.

Food inflation stayed negative at –0.69 per cent, narrowing from July’s –1.76 per cent, reflecting softer deflation in vegetables and fruits but firmer prices for proteins and edible oils.

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Vegetable prices remained sharply lower than a year ago (–15.9 per cent), while fruit inflation eased to 11.65 per cent.

Pulses rose 14.53 per cent, oils and fats jumped 21.24 per cent, and eggs climbed to 3.12 per cent. Meat and fish turned costlier, up 1.48 per cent after contracting in July.

Outside the food basket, price pressures were modest. Clothing and footwear inflation eased to 2.33 per cent, while core inflation (excluding food, fuel and volatile items) edged up slightly to 4.3 per cent.

Analysts said, as reported by the Mint, July likely marked the inflation trough, helped by a favourable base and cheaper farm produce.

S&P Global now expects CPI inflation to average 3.3 per cent in FY26, helped by GST rate cuts due later this month.

With headline inflation still well below the RBI’s 4 per cent midpoint, economists believe policymakers retain room to support growth if activity slows.

The central bank left its policy repo rate unchanged at 5.5 per cent in August and lowered its FY26 inflation forecast to 3.1 per cent.

Heavy rains and flooding in late August and early September could, however, pose risks to upcoming kharif harvests, keeping food prices a key monitorable.

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