Retail inflation edges up to 2.07% in August

Retail inflation ticked higher to 2.07 per cent in August, ending a nine-month streak of declines but staying well within the RBI’s medium-term target range of 2-6 per cent, official data released on Friday showed.

Retail inflation upped 46 basis points in August from 1.61 per cent in July, which was earlier estimated at 1.55 per cent, lowest level since June 2017. The uptick was driven by an increase in inflation of vegetables, meat and fish, oil and fats, personal care and affects, egg etc, the Ministry of Statistics and Programme Implementation said in a statement.

Food inflation, which constitutes nearly half of the CPI basket, remained in negative territory at -0.69 per cent in August compared with -1.76 per cent in July.

According to the government, Punjab was among the top five states with high year-on-year inflation of 3.51 pe cent for August. Dharmakirti Joshi, Chief Economist at Crisil, suggested that excess rainfall and flooding in Punjab, Rajasthan and Telangana in August pose a risk to kharif crop production and could increase horticultural crop prices.

As the retail inflation stayed well within RBI’s target, the economists expected repo rate cut during upcoming monetary policy meeting scheduled from September 29-October 1.

“With inflation still below the Central bank’s comfort zone, the Monetary Policy Committee is likely to go for a rate cut of 25 bps in the upcoming meeting in October,” Sujan Hajra, Chief Economist at Anand Rathi Group, said.

The RBI’s Monetary Policy Committee in August kept the repo rate unchanged at 5.5 pe cent. The RBI has cut the repo rate by 100 basis points so far this year. According to India Ratings Research, the flood situation has resulted in deflation in food prices reducing to 0.69 per cent in August 2025 (July 2025: -1.76 per cent), thereby pulling the retail inflation up from a 97-month low of 1.6 per cent in July 2025.