India’s August Consumer Inflation Is Likely To Break Nine-Month Declining Trend

After hitting multi-year lows in July, India’s Consumer Price Index (CPI) inflation is expected to have inched up in August, according to reports.

This would end a nine-month streak of declines, as the benefit of last year’s high price levels has started to fade, while food prices turned firmer. Food accounts for nearly half of the consumer price basket, making it a key driver of headline inflation.

According to a Reuters survey using data from 50 economists, CPI inflation is likely to come in at 2.1% in August, compared with 1.55% in July. Despite the expected uptick, inflation is set to remain well below the Reserve Bank of India’s (RBI) 4% medium-term target for the seventh straight month.

Meanwhile, core inflation, excluding food and fuel, was estimated to have edged up to 4.2% in August, broadly unchanged from July.

Economists attributed this partly to a surge in gold prices, which rose around 5% during the month as investors sought safe-haven assets.

July Inflation Was At 8-Year Lows

In July, India’s annual retail inflation rate slowed to 1.55% from 2.1% in June, marking the lowest level in eight years. This was led by a steep drop in food prices, even as fuel costs saw a marginal increase.  Food inflation came in at -1.76%, lower than -1.01% in June.

Last month, the Reserve Bank of India’s Monetary Policy Committee (MPC) revised its FY26 CPI inflation forecast down to 3.1% from 3.7%. The quarterly projections show estimates at 2.9% in Q1, 3.4% in Q2, 3.9% in Q3, and reaching 4.4% in Q4.

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