India's retail inflation quickens to 4.8% in August from 4.45% in July as food prices exert pressure

India's retail inflation surged to 4.82% in August 2026 from 4.45% in July 2026, driven by rising food prices and other components of the consumer basket. Rural CPI inflation stood at 5.23% in August, compared to 4.31% in urban areas. Economists had predicted the inflation rate would be 4.80% for the month. Retail inflation breached the Reserve Bank of India's medium-term target of 4% in June, reaching 4.38% from 3.93% in May.

The August inflation reading marked the highest since India adopted a revised CPI series with a new base year and updated consumption basket earlier in the year. Sugar prices hit a record high in August, likely impacting inflation. The ban on sugar exports to maintain domestic prices, introduced in May, will remain in place until the end of September.

Inflation in jewellery, particularly silver, rose significantly, with silver jewelry recording a 107.11% inflation rate in August, the highest among key items tracked in the CPI basket. Inflation in gold, diamond, and platinum jewelry increased to 35.53% in August from 32.98% in July. Inflation in the personal care, social protection, and miscellaneous goods and services category stood at 15.17% in August.

Services-related inflation remained elevated, with restaurants and accommodation services recording a 8.38% inflation rate in August, and food and beverage serving services registering an 8.41% rate. Services for goods transportation saw 14.64% inflation, while personal transport equipment and passenger transport services experienced moderate inflation of 7.40% and 3.39%, respectively.

Some vegetables, such as tomatoes and potatoes, recorded price declines, mitigating the broader rise in food prices. The RBI is mandated to maintain headline retail inflation at 5% for FY27. The RBI expects inflation to remain elevated through FY27, peaking in Q3, driven by food and fuel prices, before moderating thereafter.