Inflation Rises Marginally to 2.07% in Aug on Costly Kitchen Items

Retail inflation inched up to 2.07% in August from 1.61% in the preceding month, driven by a rise in prices of kitchen items, like vegetables, meat, fish, and eggs, according to government data released on Friday.

The rise in inflation comes after a continuous fall in the consumer price index (CPI) for nine months. It was in decline since November 2024.

The inflation was 3.65% in August 2024.

The annual food inflation in August 2025 was (-) 0.69%, according to the data released by the National Statistics Office (NSO).

"An increase in headline inflation and food inflation during the month of August 2025 is mainly attributed to an increase in inflation of vegetables, meat and fish, oil and fats, personal care and eggs," NSO said.

The Reserve Bank has been mandated by the government to ensure inflation remains at 4% with a margin of 2% on either side.

The inflation in rural India increased to 1.69% in August from 1.18% in July. In urban parts of the country, it was 2.47% compared to 2.1% sequentially.

Among states, the highest inflation was in Kerala at 9.04% and the lowest in Assam (-0.66%).

The Reserve Bank mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.

Commenting on the data, Icra Chief Economist Aditi Nayar said the sequential uptick in year-on-year CPI inflation in August 2025 was largely driven by the food and beverage segment, which was flat compared to the year-old levels, after witnessing a deflation in each of the last two months.

Core inflation inched up marginally to 4.3% in August 2025 from 4.2% in the previous month, while remaining similar to the range seen during the last seven months, she said.

"Looking ahead, despite the healthy trends in kharif sowing, large excess rains, and flooding in some parts of the country in late August 2025 and early-September 2025 could impact the kharif crop yields, and consequently output and prices, and thus, remain a key monitorable," she said.

The CPI data showed that housing inflation in August stood at 3.09% against 3.17%.

Paras Jasrai, Associate Director at India Ratings and Research, said tomato prices rose 16.9% year-on-year in August 2025 after a gap of seven months. The producers of food (rural areas) are having lower inflation than the consumers of food (urban areas).

The full impact of GST rate rationalisation will start from October, Jasrai added.

The data also showed that year-on-year inflation in 'education' in August was 3.6%, lower than 4.11% in July.

Inflation in the health segment was also lower on a sequential basis.

NSO collects price data from selected 1,181 villages and 1,114 urban markets, covering all states/UTs.