India's Inflation Rises But Remains Manageable, According to Latest Data

India's retail inflation, as calculated by the Consumer Price Index (CPI), experienced a minor increase to 2.07% in August 2025, according to the Ministry of Statistics and Programme Implementation. This marks an increase of 46 basis points from July, illustrating a manageable uptick in inflation.

The year-on-year food inflation rate for August 2025, compared to August 2024, stands at a provisional -0.69%. Rural areas faced a slightly steeper decline at -0.70%, while urban areas recorded -0.58%. This inflation mainly stemmed from rises in the prices of vegetables, meat and fish, oil and fats, and eggs.

The top five states reporting the highest year-on-year inflation in August were Kerala, Karnataka, Jammu and Kashmir, Punjab, and Tamil Nadu. Despite these regional highs, the overall inflation rate aligns with the Reserve Bank of India's (RBI) acceptable range of 2-6%.

Notably, in July, retail inflation had sharply eased to 1.55%, the lowest seen since June 2017, raising food prices as a key concern for policymakers aiming for a 4% inflation rate. While global inflation concerns persist, India has maintained a stable outlook with the RBI steady on its 6.5% benchmark repo rate, recently reduced for the first time in five years in February 2025.

Analysts predict continued control over inflation, allowing the RBI to prioritize economic growth. Recent report adjustments saw the inflation outlook for 2025-26 revised downwards from 4% to 3.7%. Assumptions of a regular monsoon suggest average inflation could range from 2.9% in Q1 2025-26 to 4.4% in Q4.