After 9 Months Of Decline, India's Retail Inflation Rises To 2.07% In August

India's annual retail inflation inched up to 2.07% in August from 1.55% in July, breaking a nine-month declining trend. This was led by an uptick in food prices.

It, however, remains well within the target inflation rate set by the Reserve Bank of India (RBI). 

Food inflation, which is a significant part of the consumer price index, came in at -0.69%, higher than -1.76% in July. It has remained negative for the third consecutive month. 

An increase in headline inflation and food inflation during August is primarily attributable to an increase in inflation of vegetables, meat and fish, oil and fats, and eggs, among others, according to an official government press release on September 12.

Vegetable prices increased, with inflation at -15.92%, compared to -20.69% last month. Pulse inflation slipped to -14.53% in August compared to -13.76% in July. 

Inflation was higher across both rural and urban areas. Rural inflation rose to 1.69% from 1.18%, while urban inflation climbed to 2.47% from 2.10% last month. In contrast, fuel and light inflation eased off slightly to 2.43% from 2.67% in July.

Well within RBI's Forecast

Earlier in August, the Reserve Bank of India held the repo rate steady at 5.50% while lowering its FY26 CPI inflation forecast to 3.1% from 3.7%. The RBI expects inflation to remain contained, supported by steady monsoons, healthy kharif sowing, and sufficient food grain reserves. 

Governor Sanjay Malhotra described the outlook as“more benign,” though he noted that core inflation may remain slightly above 4%.

RBI's next policy meeting takes place between September 29 and October 1.

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