India's retail inflation rises to 4.45% in July 2026, shows NSO data

Retail or consumer price index (CPI) based inflation inched up to 4.45% in July 2026, largely driven by higher food prices, according to government data released on Wednesday, August 12.

Inflation was 4.38% in June.

Food inflation in July rose to 5.52% from 5.32% in the preceding month, according to CPI data released by the National Statistics Office (NSO).

What is CPI inflation?

Retail inflation measures how much the prices of goods and services commonly purchased by households have increased or decreased over time. It tracks items such as food, fuel, housing, clothing, healthcare, and education.

In simple terms, CPI inflation tells us how much more expensive everyday life has become for consumers. In India, it is the main measure of inflation used by the RBI when making interest-rate decisions.

The Reserve Bank of India (RBI), which has been tasked with ensuring CPI remains at 4% with a margin of 2% on either side, had kept the short-term lending rate unchanged earlier this month, citing inflationary concerns.

What the RBI said in August 2026 policy meet

The central bank kept its benchmark policy rate unchanged for a fourth consecutive meeting last week, opting to wait for greater clarity on whether higher energy costs triggered by the Iran war feed into broader inflationary pressures.

The six-member Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, unanimously voted to keep the policy repo rate unchanged at 5.25% and retained its "neutral" policy stance.

The decision left India diverging from a growing number of regional central banks, including Indonesia and the Philippines, that have tightened monetary policy in response to higher energy prices and war-driven currency volatility.

Instead, the RBI has relied on measures announced at its previous policy meeting to attract capital inflows and support the rupee.

Announcing the decision, Malhotra said headline inflation is expected to rise in the near term and peak in the third quarter of 2026-27, largely due to food and fuel prices, before moderating.

Inflation pressures, the governor said, have not become broad-based, with core inflation, excluding precious metals, remaining benign.

Signalling there was no urgency to tighten policy, Malhotra reiterated the RBI's "resolute" commitment to bringing inflation in line with its target while waiting for greater clarity on the inflation outlook.

Inflation and growth projections

The RBI projected consumer price inflation at 5% for the current 2026-27 financial year, compared with 5.1% forecast in June. It lowered its projection for core inflation, which excludes food and fuel, to 4.3% from 4.7%.

Marginally raising its economic growth forecast for the current financial year to 6.7% from 6.6% projected in June, the RBI said domestic growth remained resilient, supported by robust domestic demand, manufacturing and services activity and strong exports, despite heightened global uncertainty stemming from the West Asia conflict and trade tensions.

However, it warned that the outlook remains uncertain due to risks from the southwest monsoon, El Nino conditions, geopolitical developments and global trade policy.