Inflation Inches Up to 2.07% in August

Urban price rise outpaces rural with a 2.47% uptick

- SHIVA RAJORA

India's retail-inflation rate, based on the consumer price index (CPI), recorded a slight uptick in August to 2.07 per cent from an eight-year low of 1.61 per cent in July owing to a low base and reduced deflation in food prices.

The inflation data, released by the National Statistics Office (NSO) on Friday, showed retail prices rose 1.69 per cent in rural India and 2.47 per cent in urban areas.

Economists reckon while low prices bode well for consumers, with the recent cuts in goods and services tax (GST) rates expected to further lower the inflation print up to 90 basis points (bps) this financial year.

However, it is not good for the government's balance sheet with the impact of slower gross domestic product (GDP) growth visible and rise in tax collection trailing the FY26 Budget targets.

The latest inflation print is in sync with the downward revision in price projections by the Reserve Bank of India (RBI) in its bimonthly policy review last month, with the average pace for 2025-26 (FY26) estimated at 3.1 per cent from 3.7 per cent.