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A rise in headline inflation and food inflation in August is mainly attributed to a rise in inflation of vegetables, meat and fish, oil and fats, personal care and egg, says NSO.
In the previous month of July 2025, the retail inflation had stood at an eight-year low of 1.61%.
India’s retail inflation, based on the Consumer Price Index (CPI), in August 2025 rose slightly to 2.07 per cent, according to the latest official data released on Friday, September 12. This is the first uptick in CPI inflation after 10 consecutive months of decline.
In the previous month of July 2025, the retail inflation had stood at an eight-year low of 1.61%. The inflation based on consumer price index (CPI) was 3.65 per cent in August 2024.
The annual inflation during August 2025 over August 2024 was at (-) 0.69 per cent, according to the data released by the National Statistics Office (NSO).
“An increase in headline inflation and food inflation during the month of August, 2025 is mainly attributed to increase in inflation of vegetables, meat and fish, oil and fats, personal care and affects, egg,” NSO said.
The Reserve Bank has been mandated by the government to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side.
Aditi Nayar, chief economist at ICRA, said, “The CPI inflation rebounded to 2.1% in August 2025 from 1.6% in July 2025, printing in line with ICRA’s expectations. The sequential uptick in the YoY CPI inflation in August 2025 was largely driven by the F&B segment, which was flat compared to the year-old levels, after witnessing a deflation in each of the last two months. Core inflation (CPI excluding F&B, F&L, and petrol and diesel for vehicles) inched up marginally to 4.3% in August 2025 from 4.2% in the previous month, while remaining similar to the range seen during the last seven months.”
The sequential build-up in prices has been quite modest in the ongoing fiscal so far, with the headline index rising by just 2.6% between March 2025 and August 2025. This has been aided by a relatively benign uptick in food prices, amid healthy crop output in the last two cropping seasons, as well as an upbeat outlook for the ongoing kharif crop, she added.
“Looking ahead, despite the healthy trends in kharif sowing, large excess rains, and flooding in some parts of the country in late August 2025 and early-September 2025 could impact the kharif crop yields, and consequently output and prices, and thus, remain a key monitorable,” Nayar said.
With the GST rate cuts being implemented on September 22, 2025, the impact of the same on the CPI inflation is unlikely to be material in the ongoing month, given that the average monthly prices are used for computation of the price indices. Overall, ICRA expects the headline CPI inflation to print at ~2.0% in September 2025, she added.
The dip in average monthly prices owing to the GST cut will start to be visible in the October 2025 data, which along with a high base (+6.2% in October 2024), is likely to soften the inflation print for the month to nearly 1.5%.
“In ICRA’s view, the GST rejig could dampen the headline CPI prints by 25-50 bps during Q3 FY2026-Q2 FY2027 relative to our pre-GST rationalisation estimates, taking the average for FY2026 to nearly 2.6%,” Nayar said.
While the average CPI inflation for FY2026 is now likely to print around 2.6%, and October-November 2025 may mark a fresh low, the trajectory subsequently remains upward sloping. This, in conjunction with the stronger-than-expected GDP growth in Q1 FY2026, and the positive impact of the GST reforms on growth in the later quarters, suggest a status quo for the repo rate in the October 2025 policy review, she added.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
September 12, 2025, 16:47 IST
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