Retail Inflation Hits 3.65% in August Amid Persistent Food Price Surge

India’s retail inflation edged up to 3.65% in August, compared to 3.54% in July, driven primarily by rising food costs. Despite the increase, inflation remained within the Reserve Bank of India’s (RBI) target range of 2-6%, reflecting the central bank’s sustained efforts to keep inflation in check.

Food inflation, a persistent concern, surged to 5.66% in August, up from 5.42% in July, though still lower than the sharp 9.36% rise seen in June. The Ministry of Statistics and Programme Implementation (MoSPI) data highlighted that while certain food prices—like cereals and dairy products—dropped, others, such as eggs, fruits, and vegetables, saw a sequential increase.

Since September 2023, retail inflation has consistently stayed below 6%, marking 13 consecutive months within the RBI’s tolerance band. Economists, however, warned that this decline may be temporary, and inflationary pressures could resurface.

The RBI recently held its benchmark repo rate at 6.5%, with no immediate plans for cuts, as it balances inflation control with promoting economic growth. The central bank projects real GDP growth of 7.2% for FY25, while targeting 4.5% consumer price index (CPI) inflation for the fiscal year.

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States like Telangana, Uttarakhand, and Delhi reported the lowest inflation rates, while others like Assam, Bihar, and Kerala experienced higher-than-average inflation, indicating regional disparities in the inflationary impact.

As inflation remains a significant challenge, the RBI’s monetary policy will continue to play a crucial role in regulating price levels, aiming for a medium-term inflation target of 4%, with a margin of 2%.