Retail inflation rose to 2.07 percent in August from 1.61 percent the previous month, influenced by increased prices of kitchen staples such as vegetables, meat, fish, and eggs, as indicated by government data released on Friday. This uptick follows a consistent decline in the consumer price index (CPI) over the last nine months, having decreased since November 2024. In August 2024, inflation was recorded at 3.65 percent. The annual food inflation stood at (-) 0.69 percent in August 2025, according to the National Statistics Office (NSO). The NSO noted that the rise in overall and food inflation during August 2025 was primarily due to higher prices for vegetables, meat and fish, oil and fats, personal care items, and eggs.
The government has tasked the Reserve Bank with keeping inflation around 4 percent, allowing for a margin of 2 percent. In rural areas, inflation increased to 1.69 percent in August from 1.18 percent in July, while urban inflation rose to 2.47 percent from 2.1 percent. Among states, Kerala recorded the highest inflation rate at 9.04 percent, with Assam showing the lowest at (-) 0.66 percent. The Reserve Bank considers retail inflation when determining its bi-monthly monetary policy. Icra Chief Economist Aditi Nayar commented that the year-on-year CPI inflation increase in August 2025 was mainly driven by the food and beverage sector, which has remained stable compared to last year after experiencing deflation in the preceding two months.
Core inflation slightly rose to 4.3 percent in August 2025 from 4.2 percent the month before, remaining consistent within the range observed over the past seven months. She cautioned that despite favorable kharif sowing trends, excessive rainfall and flooding in some regions in late August and early September 2025 could affect crop yields and, in turn, influence output and prices, making it a critical factor to monitor.
