Retail inflation inches up to 2.07% in August; food prices remain in deflationary zone

Headline retail inflation rose marginally to 2.07% in August 2025, up from 1.61% in July, staying well within the Reserve Bank of India’s target range, according to official data released on Friday.

The RBI is mandated to not let inflation overshoot its tolerance range of 2%-6% for more than three quarters in a row.

The year-on-year Consumer Price Index (CPI) inflation for August marked an increase of 46 basis points over the previous month, mainly driven by higher prices of vegetables, meat and fish, edible oils, eggs and personal care items.

"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," National Statistics Office said.

Food inflation, however, stayed in the negative territory for the third month in a row at (-)0.69%, even as it showed an improvement compared to (-)1.76% in July.

Rural food inflation stood at (-)0.70% while urban food inflation was (-)0.58%, the data showed.

In the rural sector, headline inflation rose to 1.69% in August from 1.18% in July. Urban inflation climbed to 2.47% from 2.10% a month ago.

Housing inflation eased to 3.09% in August from 3.17% in July. Education inflation also softened to 3.60% from 4.11%, while health inflation moderated slightly to 4.40% against 4.57% in the previous month.

Transport and communication inflation cooled to 1.94% from 2.12%, and fuel and light inflation fell to 2.43% from 2.67% in July.