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Informist, Monday, Sept. 14, 2026

NEW DELHI – India's retail inflation, based on the CPI, rose to a 20-month high in August due to higher food, transport, and restaurant services inflation driven by the impact of the ongoing war in West Asia. The retail inflation was seen broadening in August, according to data released Monday by the statistics ministry.

Headline inflation rose to 4.82% on year in August from 4.45% in July, surpassing the Reserve Bank of India's medium-term target of 4% for the third consecutive month. CPI inflation was 2.01% in August last year.

The CPI inflation print was broadly in line with economists' expectations. According to an Informist poll, headline inflation was seen at 4.8% in August. The on-month rise in inflation was also led by inflation in the personal care and information and communication segments.

At 5.23%, rural inflation in August continued to be higher compared to urban inflation at 4.31%. In July, rural inflation was 4.84% and urban inflation was 3.96%.

The food price index was up 1.2% on month in August, while the general index rose 0.7% month-on-month from July. Core inflation, which excludes food and fuel items, rose to 4.2% in August from 3.9% in July. Food inflation rose to 5.95% on year from 5.52% in July. Ginger, onion, and garlic were among the key items with high inflation at an all-India level in August. Ginger inflation was 73.82% last month, down from 83.57% in July. Onion inflation increased to 48.27% from 22.54%, and garlic inflation rose to 43.60% last month from 35.36% in July.

Food and beverages inflation rose to 5.66% in August from 5.24% in July. With the latest data, inflation in the food and beverages segment is likely to cross the 7.0%-mark by October, which would exert upward pressure on the headline inflation number, Aditi Nayar, chief economist at ICRA, said in a note. "Risks are tilted to the upside, given that the impact of the uneven temporal and spatial distribution of the monsoon on crop output remains to be seen."

Inflation in restaurants and accommodation services rose to 8.38% from 7.72% in July. Within this, food and beverage services inflation climbed to 8.41% last month from 7.75% in July. 

Transport inflation was 4.60% last month, up from 4.43% in July, as an outcome of the escalation in the war which has disrupted the global supply chain and hiked commodity prices. Inflation in transport services for goods also jumped to 14.64% in August from 7.77% a month ago.

Information and communication inflation rose to 2.01% in August from 0.63% in July, reflecting the pass-through of higher prices of mobile phones, laptops, and other gadgets to consumers. In this segment, pen-drive and external hard disk inflation rose 16.78% in August, mobile headset inflation rose 3.50%, and personal computer, laptop, and related item inflation rose 4.46%. In July, pen-drive and external hard disk inflation had risen 14.50%, mobile headset inflation had risen 2.27%, and personal computer, laptop and related item inflation had risen 3.02%.

Inflation in the housing, water, electricity, gas and other fuels segment rose to 2.61% in August from 2.16% a month ago. Electricity, gas, and other fuel inflation rose to 3.09% in August from 2.02% a month ago.

Health inflation remained flat at 1.34% on year in August. Educational services inflation, which has been rising for the past few months, rose to 3.73% in August from 3.64% in July. Inflation in personal care, social protection, and miscellaneous goods and services rose to 15.17% in August from 14.77% in July. The category continued to show the highest inflation within the basket. Silver jewellery inflation was 107.11% last month, down from 109.89% in July. Gold, diamond, and platinum jewellery inflation rose to 35.53% from 32.98%.

Among states and union territories, Telangana, Dadra and Nagar Haveli and Daman and Diu, Tamil Nadu, and Puducherry reported the highest inflation in August at 6.27%, 6.22%, 5.92%, and 5.85%, respectively. Mizoram at 2.35%, Delhi at 2.61%, and Meghalaya at 2.74% reported the lowest inflation.

ICRA expects CPI inflation for September to cross the 5.0%-mark. The rating agency sees retail inflation hardening further to around 6.0% during Oct-Nov, partly on account of the low base led by rationalisation of the Goods and Services Tax, Nayar said. "Our base case is that a rate hike could materialise in the December 2026 meeting, particularly if there is evidence of a generalisation in inflationary pressures and crude oil prices sustain at elevated levels." 

In the wake of rising inflation and volatile oil prices, economists expect the Reserve Bank of India's Monetary Policy Committee to hike the RBI repo rate in the October meeting. Economists at the State Bank of India expect a 25 basis points hike in October in case the inflation is around 4.8-4.9%, followed by another 25 bps hike in December.

Nayar said higher crude oil prices could lead to an upward revision in the retail selling prices of petrol and diesel. This could "percolate into generalised price pressures, then the expected rate hike could be pre-poned to October 2026 from December 2026," she said. 

The following table details the general index of the CPI and inflation for August:

Source: Ministry of Statistics and Programme Implementation.

End

Reported by Radhika Tiwari and Shweta

Edited by Pankaj Aher

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