India’s inflation rises to 2.07% in August, in line with estimates

India’s consumer inflation edged higher in August after nine consecutive months of easing, with headline inflation rising to 2.07 percent, government data showed Friday.

The figure was in line with economists’ median estimate of 2.1 percent in a Reuters poll.

Inflation in July had slowed to 1.61 percent, the lowest since June 2017, largely due to softening food prices.

The uptick in August was attributed mainly to higher prices of vegetables, meat and fish, oils and fats, personal care products, and eggs.

Rural and urban inflation trends

Data showed both rural and urban sectors experienced an increase in price growth.

Rural headline inflation rose to 1.69 percent in August, compared with 1.18 percent in July.

Inflation	August 2025 (Prov.)			July 2025 (Final)
	Rural	Urban	Combined	Rural	Urban	Combined
CPI (General)	1.69	2.47	2.07	1.18	2.10	1.61
CFPI	-0.70	-0.58	-0.69	-1.74	-1.90	-1.76

Food inflation in rural areas remained negative but moderated to -0.70 percent from -1.74 percent the previous month.

Urban inflation picked up more sharply, rising to 2.47 percent from 2.10 percent in July.

Food inflation in urban regions also narrowed its decline, at -0.58 percent compared with -1.90 percent in the previous month.

Inflation's impact on policy

Despite the August rise, inflation remains close to the Reserve Bank of India’s target range of 2 to 6 percent.

The central bank last month projected consumer price index growth of 3.1 percent for the fiscal year ending March 2026.

Analysts said subdued inflation gives the RBI scope to ease monetary policy if needed, particularly as external headwinds weigh on growth.

In August, the United States imposed an additional 25 percent tariff on Indian imports in response to New Delhi’s purchases of Russian oil.

The move lifted total duties to as high as 50 percent, among the steepest levies on any of Washington’s trade partners.

According to Goldman Sachs, the tariffs could shave 0.6 percentage points off India’s annual GDP growth rate in the current fiscal year.

GST cuts to boost consumption

To cushion the blow to exports and encourage domestic demand, the government announced broad-based cuts to the goods and services tax on September 3.

The measures, effective September 22, are expected to lower prices of fast-moving consumer goods, automobiles and farm products.

Several leading companies have already responded.

Automakers including Tata Motors and Maruti Suzuki have announced price reductions, while consumer goods firms such as Hindustan Unilever, Colgate-Palmolive and Mars Wrigley are also said to be preparing to pass on benefits to customers.

India’s economy expanded at an annual pace of 7.8 percent in the April–June quarter, outpacing expectations.