Retail Inflation Inches Up to 2.07% in August, Stays Within RBI’s Comfort Zone

India’s retail inflation edged slightly higher to 2.07 per cent in August 2025, remaining well within the Reserve Bank of India’s (RBI) tolerance band of 2–6 per cent, according to data released by the Ministry of Statistics and Programme Implementation on Friday.

The latest figure, cited by ANI, reflects a 46-basis-point increase over July, when inflation had cooled to 1.55 per cent — the lowest since June 2017.

Food inflation, measured by the Consumer Food Price Index (CFPI), stood at –0.69 per cent on an annual basis in August. Rural and urban food inflation were recorded at –0.70 per cent and –0.58 per cent, respectively. The ministry attributed the uptick in overall price levels largely to higher costs of vegetables, meat and fish, edible oils and fats, and eggs.

Among states, Kerala, Karnataka, Jammu and Kashmir, Punjab and Tamil Nadu reported the highest inflation rates during the month.

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Despite the mild rise, economists note that inflation remains comfortably within the central bank’s target range. Policymakers are especially watchful of food prices, as the RBI aims to keep headline inflation anchored around the 4 per cent mark.

Globally, inflation continues to trouble several economies, but India has managed to maintain relative stability. The RBI had kept its repo rate steady at 6.5 per cent for 11 straight reviews before delivering its first rate cut in nearly five years this February.

With inflation expected to stay under control, analysts believe the central bank will have more leeway to support growth. The RBI recently trimmed its inflation forecast for 2025–26 to 3.7 per cent from 4 per cent. Projections for the current fiscal year stand at 2.9 per cent in Q1, 3.4 per cent in Q2, 3.9 per cent in Q3, and 4.4 per cent in Q4, assuming a normal monsoon.