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Informist, Friday, Aug. 7, 2026

By Shweta

NEW DELHI – India's headline inflation is likely to remain unchanged at 4.4% in July despite higher food prices caused by deficient rainfall across the country, as a favourable base effect is expected to offset much of the increase.

According to the median of an Informist poll of 12 economists, retail inflation based on the Consumer Price Index is seen at 4.4% in July. CPI inflation rose to an 18-month high of 4.38% in June, exceeding the Reserve Bank of India's medium-term target of 4% for the first time in 17 months.

CPI inflation was 1.62% in July last year based on the new series with 2024 as the base year. The statistics ministry will release inflation data for July at 1600 IST Wednesday.

Food prices have risen because of deficient rainfall and supply disruptions linked to the war in West Asia, economists said. However, the favourable base effect is expected to prevent a rise in headline inflation. The main upside risk to the inflation outlook remains food prices, which saw a broad-based increase in July, according to Dipanwita Mazumdar, economist at Bank of Baroda.

According to data from the Department of Consumer Affairs, retail onion prices jumped 23.4% on month in July. Potato prices rose 4.4% on month, while edible oil prices increased about 1%. Tomato prices, however, fell 1.1% on month.

Food prices have risen as southwest monsoon rainfall has remained deficient so far this season. According to the India Meteorological Department, rainfall across the country was 13% below normal during the first two months of the season.

Core inflation, which excludes food and fuel items, is seen easing to 3.9% in July, down from 4.1% in June, according to the median of the poll. "Core inflation is likely to get some relief from softening of international gold prices," Mazumdar said in a note. "However, upside risks may emerge in the near term as Q1 (Apr-Jun) (earnings) transcript of major companies indicated passthrough of higher input costs to consumers amidst robust demand conditions."

Headline inflation for 2026-27 (Apr-Mar) is estimated at 5.0%, in line with the RBI's latest projection, according to the poll. On Wednesday, the central bank's Monetary Policy Committee cut its CPI inflation projection by 10 basis points to 5.0% despite risks from El Nio and uncertainties due to the war in West Asia.

On Wednesday, RBI Governor Sanjay Malhotra said headline inflation is expected to rise further in the near term. "Although generalised inflation pressures continue to remain modest so far, the risks of second-round impact of higher food, fuel, and other input prices translating to broad-based inflation persist," Malhotra had said.

The RBI has projected CPI inflation to rise to 5.9% in Oct-Dec, before moderating to 5.5% in Jan-Mar and 5.3% in Apr-Jun.

The following is a summary of the poll on CPI inflation in July, in ascending order:

End

Edited by Saji George Titus

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