Retail inflation rises after 9 months

"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 effects, and eggs," the National Statistics Office said.

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The latest headline figure was in line with expectations, and underscored the notion that average rate for FY26 will undershoot the RBI's projection of 3.1%. The RBI expects the inflation to inch up to 4.4% by year-end, and rise further to 4.9% in the first quarter of the next financial year.

Upasna Bhardwaj, economist at Kotak Mahindra Bank, said, "While we see a pause by the RBI in the upcoming policy, we do see some scope for rate cuts worth 25-50 basis points opening up from December policy if downside risks to growth materialize and the Fed moves ahead with aggressive rate cuts."

Madhavi Arora, chief economist, Emkay Global, said the continued spate of inflation undershoot would ensure the full-year figure will likely be below the RBI's estimates by at least 50 bps.