Retail inflation rose to a 19-month high of 4.45% in July, driven up by higher food and fuel prices, according to official data released. The Consumer Price Index (CPI) data, released by the Ministry of Statistics and Programme Implementation, showed that food, restaurant and accommodation services, and transport became costlier in July, while inflation in other services such as healthcare, recreation, sports and culture cooled marginally.

Key Highlights

• Retail inflation rose to a 19-month high of 4.45% in July 2026, driven by food and fuel.
• Food inflation quickened to 5.2%, while restaurant and accommodation services inflation hit a yearly high of 7.7%.

The CPI series was updated earlier this year with a new base year of 2024. As a result, while historical data for the overall index remains available going back to August 2021, sector-wise data is currently available only from January 2026 onwards.

Costlier Food Ahead as Vegetable Prices Spike

Inflation in the food and beverages category quickened to 5.2% in July 2026, up from 5.05% a month earlier. According to Rajeev Sharan, Head of Research at Brickwork Ratings, this was driven by fresh spikes in onion and garlic prices alongside persistently high ginger costs, even as potato and tomato prices swung into deflation.

Looking ahead, food inflation is expected to rise further, according to Madan Sabnavis, Chief Economist at Bank of Baroda. He noted that while the monsoon has recovered substantially in July, there have been reports of crop damage due to excess rainfall. This, combined with a longer cropping period and delayed harvest, is expected to push up prices of pulses in particular, while elevated global prices of edible oils are also being felt in domestic markets.

Also Read: Retail Inflation Rises to 4.38% in June, Crosses RBI's 4% Target

Fuel Prices Add to Inflationary Pressure

Driven by higher food and fuel costs, inflation in the restaurants and accommodation services segment quickened to 7.7% in July 2026 - the highest level recorded this year - up from a previous yearly high of 6.9% in June.

Madan Sabnavis explained that the impact of ongoing geopolitical tensions on prices is visible in higher inflation for restaurants and food services, where elevated fuel prices have prompted businesses to raise prices. He noted that while there has been some normalisation in fuel supply, prices have remained sticky and tend to be inelastic in the downward direction.

Inflation in the transport sector also edged up to 4.4% in July 2026, from 4.3% in June, reflecting the broader impact of fuel cost pressures across the economy.

Some Segments See Inflation Ease

Not all retail inflation categories saw rise during the month. The health segment, for instance, saw inflation cool to 1.3% in July 2026, down from 1.4% in June, continuing a declining trend that has been in place since February 2026.

The 'recreation, sport and culture' category also saw inflation ease to 1.6% in July 2026, down from 1.75% a month earlier.

Meanwhile, inflation in the 'personal care, social protection and miscellaneous goods & services' category - which includes gold and silver purchases - remained in double digits at 14.8% in July 2026, though this marked the lowest level recorded for the category so far this year.