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India's retail inflation

India’s retail inflation rose to 2.07% in August, driven by specific items, while overall food prices surprisingly remained in the negative, offering some economic relief.

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In summary, India’s retail inflation saw a marginal increase to 2.07% in August 2025, up from 1.61% in July. Despite this rise, the figure remains comfortably within the Reserve Bank of India’s (RBI) target range of 2%−6%.

India's retail inflation

According to the Ministry of Statistics and Programme Implementation (MoSPI) data released on Friday, the India’s retail inflation measured by the Consumer Price Index (CPI) increased to 2.07% in August, up from 1.61% in July. Food inflation for August saw an increase of 107 basis points from July, reaching -0.69%. The inflation rates were -0.70% in rural areas and -0.58% in urban areas.

The rise in headline inflation and food prices in August can be attributed chiefly to the increased inflation in categories such as vegetables, meat and fish, oil and fats, and personal care. In the rural sector, headline inflation recorded 1.69% in August, up from 1.18% in July 2025. Food inflation, calculated via the CFPI, stood at -0.70% for August, improving from -1.74% in July. Urban inflation also showed growth, rising from 2.10% in July to 2.47% in August, with food inflation climbing from -1.90% in July to -0.58% in August. Additionally, MoSPI data revealed year-on-year housing inflation for August at 3.09%, slightly lower than July’s rate of 3.17%.

Inflation Key Takeaways

Inflation– The Consumer Price Index (CPI) India’s retail inflation rose by 46 basis points month-on-month to 2.07%.

Primary Drivers– The increase was mainly due to higher prices for vegetables, meat, fish, edible oils, eggs, and personal care items.

Food Inflation- For the third consecutive month, food inflation remained negative at (−)0.69%. This is an improvement from the (−)1.76% recorded in July.

Rural vs. Urban– Inflation rose in both sectors. Rural inflation increased to 1.69% (from 1.18%), and urban inflation climbed to 2.47% (from 2.10%).

Cooling Sectors

Several key areas saw a moderation in inflation, including:

  • Housing: 3.09% (down from 3.17%)
  • Education: 3.60% (down from 4.11%)
  • Health: 4.40% (down from 4.57%)
  • Fuel and Light: 2.43% (down from 2.67%)
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