India retail inflation holds steady at 4.45% in July despite stress over rise in food, fuel prices

India's retail inflation remained steady at 4.45% in July, despite concerns over rising food and fuel prices. This aligns with the expectations of the RBI's Monetary Policy Committee, which deemed no widespread inflation pressure in the economy during their recent meeting. The inflation figure also matches the expectations of economists surveyed by Bloomberg, who anticipated it to be 4.5%. The plateauing of inflation numbers comes after a series of increasing monthly data using a base year of 2024.

CMIE data indicates that inflation dropped to near-zero levels (0.04%) in October 2025 and has been increasing monthly since then, reaching 4.45% in July. Most of this inflation surge was attributed to food and fuel prices. Core inflation, which excludes food and fuel, remained at 4% in July, similar to the June figure of 4%. However, non-core inflation rose from 1.9% in January to 5.1% in July, indicating the impact of food price increases.

Food inflation specifically jumped from 2.1% to 5.2% between January and July, with food items comprising 36% of the CPI basket.

Fuel prices, though not a separate category in CPI data, saw significant inflation growth due to the ongoing conflict in the Middle East. LPG and PNG inflation, with a combined weight of 1.98%, increased from 1.7% in January to 5% in July. The personal transport fuel category, encompassing petrol, diesel, and CNG (with weights of 4.85%), witnessed a steep rise from 0.07% in January to 7.55% in July.

The RBI anticipates annual CPI inflation to be 5% in 2026-27, with quarterly values expected to be 4.7%, 5.9%, and 5.5% in the quarters ending September 2026, December 2026, and March 2027, respectively. Analyst Aastha Gudwani from Barclays expects the MPC to maintain a pause in interest rates due to the persistent influence of rising food and administered prices on inflation.