Indian Rupee: Inflation risks broadening – Societe Generale
Societe Generale economist Kunal Kundu expects India’s August Consumer Price Index (CPI) inflation to rise to around 4.8% year-on-year from 4.4% in July, the highest reading under the new CPI series.
Societe Generale's Kunal Kundu anticipates India's Consumer Price Index (CPI) inflation for August 2026 to climb to approximately 4.8% year-on-year, up from 4.4% in July – the highest reading under the new CPI series. Persistent food and fuel inflation, rising input costs, and the beginning of broader cost pass-through are cited as factors weakening India's inflation prospects, signaling a less benign inflationary environment.
If realized, this would be the third consecutive month of inflation surpassing the RBI's 4.0% target, underscoring the emergence of more widespread inflationary pressures. Food inflation is expected to exceed 6.0% year-on-year in August, likely dominating headline CPI, while fuel inflation is also likely to intensify due to high global energy prices and the lagged effects of recent domestic fuel price adjustments.
The combination of these factors suggests that India's inflation dynamics are becoming increasingly complex, with broader categories of goods and services experiencing price increases.
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