India’s retail inflation rises to 2.07% in August, still below RBI’s 4% target

India’s retail inflation increased to 2.07% in August, reversing the declining trend seen in July when inflation hit its lowest level in eight years.

According to data released by the Ministry of Statistics, the rise was driven by a slight increase in food prices and core items.

In July, the consumer price index (CPI) inflation stood at 1.55%, but it rose to 2.07% in August. Economists had projected a modest increase to 2.11%, based on a Bloomberg poll. Despite the uptick, inflation remains well below the Reserve Bank of India’s target of 4%.

Within the food category, vegetables saw slower deflation, with prices falling 15.9% compared to 20.7% in July. Tomato prices rose by 16%, after a sharp deceleration of 34.1% the previous month. Cereal inflation eased to 2.7% in August from 3.3% in July. Meat and fish prices increased by 1.5%, reversing a decline of 0.6% in the prior month. Milk and milk products inflation was recorded at 2.6%, slightly down from 2.7% in July.

Core inflation, which excludes food and fuel, remained steady at 4.1%. Other segments also showed mixed trends. Clothing and footwear inflation eased to 2.3% from 2.5%. Housing inflation inched up to 3.2% from 3.1%. Fuel and light inflation fell to 2.4% from 2.7%.

The inflation trends follow a global pattern, as US core CPI also rose as expected, keeping the Federal Reserve on track for potential rate cuts.