India’s retail inflation likely rose to a 20-month high of 4.9% in August, from 4.5% the previous month, on account of rising food prices amid deficient rainfall, while price risks from the West Asia war continue, showed a Mint poll of 21 economists.
This would be the third print above the Reserve Bank of India’s (RBI’s) medium-term target of 4.0% and the highest in the current 2024 Consumer Price Index (CPI) series. Considering back-series data for older months, though not strictly comparable, it would be the highest print since December 2024.
Economists polled by Mint projected CPI inflation in the range of 4.5-5.1%, with all but one expecting a rise in the print. The official data is scheduled to be released on 14 September.
Broader pressure
“While food inflation remains the primary driver of the headline print, the more important signal from the August data may be the increasing evidence of cost pressures filtering through a wider set of consumption categories,” said Societe Generale.
Food, which constitutes nearly 35% of the overall inflation basket, has been the primary factor pushing headline inflation up. stood at 5.5% in July, sharply up from 2.1% in January 2026. Transport inflation also crossed 4%-mark in June and stood at 4.4% in July.
Beyond food and electricity, gas and other fuel groups, core inflation also stood at 4%. “Food inflation is becoming increasingly broad-based, whereas gradual strengthening in core inflation—particularly after excluding auto fuel and precious metals—indicates that underlying inflationary pressures are slowly gaining traction,” said Union Bank of India in a report last week.
Crude risk
Should August print come as expected, the average inflation print for July-August would be 4.7%—in line with the RBI’s latest projection for the July-September quarter. However, with the Brent crude , the risks from the West Asia war continue along with the delayed pass-through of previous rises. The RBI expects inflation to rise to 5.9% in October-December, before easing to 5.5% in January-March.
While the Monetary Policy Committee (MPC) held the policy steady at 5.25% in August, it noted that the inflation outlook was “hazy” and there was a need for greater clarity to emerge before taking any policy action. Economists also believe the RBI will remain data-dependent before taking a call on a rate hike, though it can be expected by December if price pressures keep rising at the current pace.