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Informist, Friday, Sept. 12, 2025

 

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--India Aug CPI inflation 2.07% vs 1.61% Jul
--Informist poll estimated India Aug CPI inflation at 2.1%
--India Aug CPI food inflation -0.69% vs -1.76% Jul
--India Aug CPI rural inflation 1.69% vs 1.18% Jul
--India Aug CPI urban inflation 2.47% vs 2.10% Jul
--India Aug CPI general index up 0.5% on month
--India Aug CPI food price index up 0.7% on month
--India Aug CPI cereals and products index up 0.3% on month
--India Aug CPI vegetable index up 3.3% on month
--India Aug CPI pulses and products index down 0.4% on month
--India Aug CPI oils and fats index up 1.9% on month
--India Aug CPI food, beverage index up 0.6% on month
--India Aug CPI housing index up 0.5% on month
--India Aug CPI clothing, footwear index up 0.1% on month
--India Aug CPI fuel and light index up 0.2% on month
--India Aug CPI miscellaneous index up 0.4% on month
--India Aug CPI core inflation 4.1% vs 4.1% Jul

 

NEW DELHI – India's headline CPI inflation rose to 2.07% in August from an eight-year low of 1.61% in July because of a rise in food prices, data released by the statistics ministry Friday showed. This is the first time CPI inflation has risen in 10 months and the seventh consecutive month when it is below the Reserve Bank of India's medium-term target of 4.0%.

 

At 2.07%, CPI inflation in August was in line with the consensus estimate. According to an Informist poll, headline inflation was seen at 2.1% in August. CPI inflation was 3.65% in August 2024 and the July CPI inflation print was revised higher to 1.61% from the original estimate of 1.55%.

 

Despite rising for the first time since October, CPI inflation remains well below the central bank's target and will continue to provide comfort to the Monetary Policy Committee, which left the repo rate unchanged at 5.50% in August.

 

The MPC has lowered the policy rate by 100 basis points in 2025 so far and economists expect another 25-50 bps of cuts in the December quarter. "This (August CPI inflation) gives the Reserve Bank scope to resume its loosening cycle to provide a bit more policy support in the face of punitive US tariffs," Shilan Shah, deputy chief emerging markets economist at Capital Economics, said in a note. 

 

With inflation averaging 1.8% in Jul-Aug, it will have to rise to 2.5-2.7% in September to be in line with the Reserve Bank of India's projection of 2.1% for the September quarter.

 

"Inflation will continue rising from here, but it will be very gradual. Favourable weather conditions are going to keep a lid on food price inflation, while underlying prices pressure should also remain in check as the economy cools following a very strong first half of 2025," Shah said. 

In August, food inflation rose but remained in the negative zone for the third consecutive month. Food inflation was (-)0.69% last month, higher than (-)1.76% in July, which was the lowest since January 2019.

 

Sequentially, retail food prices rose 0.7% in August, which led to a 0.5% on month rise in the overall index of the CPI from July. Vegetable prices led the rise in food prices with a 3.3% on month increase in August. Oils and fat prices rose 0.6% on month in August and cereal prices increased 0.3% from July. 

 

Core inflation--or inflation without food and fuel items--remained at 4.1% in August, the same as in July. Rural inflation rose to 1.69% last month from 1.18% in July. Urban inflation increased to 2.47% August from 2.10% in the previous month. 

 

While CPI inflation is seen rising in months ahead, it is likely to remain low with companies expected to lower prices after the changes made to the goods and services tax regime, economists said. "Going ahead, the one-time GST cut impact is likely to play out in the year ahead offsetting in part the impact of adverse base effect into FY27," Upasna Bhardwaj, chief economist, Kotak Mahindra Bank, said.

 

The following table details sequential and annual changes in the main components of the CPI (Combined):

 

	Weight	Index for August	Month-on-month change (in %)	Year-on-year change (in %)
				August	July
Cereals and products	9.67	197.6	0.3%	2.70%	3.03%
Meat and fish	3.61	226.6	(-)1.2%	1.48%	(-)0.61%
Egg	0.43	194.9	(-)1.9%	3.12%	2.21%
Milk and products	6.61	191.4	0.2%	2.63%	2.69%
Oils and fats	3.56	195.8	1.9%	21.24%	19.24%
Vegetables	6.04	219.2	3.3%	(-)15.92%	(-)20.65%
Pulses and products	2.38	183.5	(-)0.4%	(-)14.53%	(-)13.76%
Sugar and confectionery	1.36	136.3	0.7%	3.73%	3.28%
Spices	2.5	220.7	0.0%	(-)3.24%	(-)3.12%
Food and beverages	45.86	202.8	0.6%	0.05%	(-)0.84%
Pan, tobacco and intoxicants	2.38	213.7	0.2%	2.49%	2.45%
Clothing and footwear	6.53	197.3	0.1%	2.33%	2.50%
Housing	10.07	186.7	0.5%	3.09%	3.17%
Fuel and light	6.84	181.0	0.2%	2.43%	2.67%
Miscellaneous	28.32	193.6	0.4%	5.05%	5.01%
General Index	100	197.0	0.5%	2.07%	1.61%
Consumer Food Price Index	39.06	202.0	0.6%	(-)0.69%	(-)1.76%

Source: Ministry of Statistics and Programme Implementation

 

End

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

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