Retail inflation edged back above 2% in August 2025, after dropping to an eight-year low of 1.61% in July. The year-on-year Consumer Price Index (CPI) stood at 2.07%, significantly lower than 3.65% recorded in August 2024.

Key Highlights

• India’s CPI inflation rose to 2.07% in August, up from 1.61% in July, driven by food price upticks. 
• Urban inflation reached 2.47% while rural inflation was 1.69%; food inflation eased further.

Food inflation also increased, climbing to -0.69% in August from -1.76% in July, largely due to higher prices of vegetables, fruits, and cereals. While vegetables, pulses, and spices continued to show negative inflation on an annual basis, cereals inflation moderated, and edible oils and fruits saw an uptick.

Rural inflation rose to 1.69% from 1.18%, while urban inflation increased to 2.47% from 2.10% in July. Food inflation trends mirrored this divide, with rural at -0.70% and urban at -0.58% in August.

Healthcare, education, housing, fuel, and transport categories all registered moderate price rises, while Kerala posted the highest state-level inflation at 9.04%, followed by Karnataka, Jammu & Kashmir, Punjab, and Tamil Nadu.

Also Read: Retail Inflation Hits 8-Year Low at 1.6% in July

Core inflation, excluding food and petroleum, held steady at 4.2%, with higher gold prices driving core goods inflation, even as services inflation eased.

Economists note inflation remains below 4% this financial year, in line with the Reserve Bank of India’s FY26 projection of 3.1%. Analysts expect further easing supported by recent GST rate cuts, with Crisil revising its FY26 inflation forecast to 3.2% from 3.5%.