July CPI rises from 4.38 per cent in June as food inflation reaches 5.52 per cent; rural inflation stays above urban levels
India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 4.45 per cent in July 2026 from 4.38 per cent in June, marking an 18-month high and remaining above the Reserve Bank of India’s 4 per cent target for the second consecutive month. The increase was driven largely by higher food inflation, while price pressures remained stronger in rural India than in urban areas.
The July CPI data, released by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation on Wednesday remained were also above the market estimate of 4.40 per cent. Rural headline inflation stood at 4.84 per cent in July, up from 4.74 per cent in June, while urban inflation edged up to 3.96 per cent from 3.93 per cent.
“We see higher inflation potential in future given the state of monsoon and area under cultivation. While monsoon has recovered substantially in July, there has been news of crop damage due to excess rains…This, combined with a longer cropping period and hence harvest, will push up prices of pulses in particular. Global prices of edible oils are also high, which is being felt in domestic markets,” said Madan Sabnavis, Chief Economist, Bank of Baroda.
Corresponding inflation rates for rural and urban are 4.84 per cent and 3.96 per cent, respectively, the ministry said.
“As expected, the CPI inflation only inched up to 4.45 per cent (ICRA’s exp: 4.5 per cent) in July 2026 from 4.38 per cent in June 2026, amidst a gradually creep upwards in food & beverages and restaurants and accommodation services,” said Aditi Nayar, Chief Economist, Icra.
Food Inflation Rises To 5.52%
Food inflation, measured by the All India Consumer Food Price Index (CFPI), rose to 5.52 per cent in July from 5.32 per cent in June. Rural food inflation was higher at 5.79 per cent, compared with 5.05 per cent in urban India. The broader food and beverages category recorded inflation of 5.24 per cent in July. Rural inflation in the category was higher at 5.53 per cent, compared with 4.75 per cent in urban areas.
“Despite unideal weather conditions, farmers have remained determined, ensuring that demand for food is met. Additionally, above adequate inventories of staples including rice and wheat have supported domestic availability of food”, says Rajeev Juneja, President, PHDCCI.
Among key food items, ginger recorded inflation of 83.62 per cent in July, sharply higher than 50.41 per cent in June. Garlic inflation increased to 35.36 per cent from 17.93 per cent, while onion inflation climbed to 22.54 per cent from 4.73 per cent.
At the other end, potato prices recorded negative inflation of 16.56 per cent, although the decline was narrower than the 20.34 per cent contraction in June. Lady’s finger, peas and tomatoes recorded negative inflation of 5.52 per cent, 5.27 per cent and 4.59 per cent, respectively.
Silver Jewellery Records 109.84% Inflation
Silver jewellery recorded the highest inflation among the key items tracked by the NSO at 109.84 per cent in July, although the rate was lower than 133.24 per cent in June. Gold, diamond and platinum jewellery recorded inflation of 32.98 per cent, down from 36.81 per cent in June. The figures are part of the overall CPI item-level inflation data and are separate from the food inflation measure.
“Difficulties in accessing international markets, due to geopolitical uncertainties, have constrained the supply of precious metals. This has led the prices of jewellery items to skyrocket,” said PHDCCI.
Rural Price Pressures Remain Higher
The rural-urban divergence extended beyond food. Clothing and footwear inflation stood at 3.97 per cent in rural India compared with 2.41 per cent in urban areas. Inflation in housing, water, electricity, gas and other fuels was 2.47 per cent in rural areas against 1.98 per cent in urban India.
Transport inflation was also marginally higher in rural India at 4.49 per cent, compared with 4.37 per cent in urban areas. While housing inflation stood at 2.22 per cent nationally in July, with rural inflation at 2.80 per cent and urban inflation at 2.01 per cent.
Personal Care, Restaurants See Elevated Inflation
Among broader consumption categories, personal care, social protection and miscellaneous goods and services recorded inflation of 14.77 per cent in July. Rural inflation in the category was 15.57 per cent, while urban inflation stood at 13.74 per cent.
Restaurants and accommodation services recorded inflation of 7.72 per cent, while paan, tobacco and intoxicants recorded 4.79 per cent inflation. Education services inflation stood at 3.64 per cent.
“Intensifying El Nino conditions, with Southwest rainfall being predicted at below 94 per cent of the Long Period Average, has caused the food supply chain to weaken. The prolonged West-Asia crisis continues to bring volatility in Crude Oil prices, driving fuel and LPG costs to increase. This has driven the inflation rate of Transport to be 4.43 per cent and of Restaurants and Accommodation Services to be 7.72 per cent in July, 2026, ” added Juneja.
The cost of operating personal transport equipment rose 7.36 per cent, while transport services for goods recorded inflation of 7.77 per cent. Passenger transport services recorded inflation of 2.90 per cent. Purchase of vehicles, however, recorded negative inflation of 4.37 per cent during the month.
Health inflation was relatively moderate at 1.34 per cent, while information and communication recorded inflation of 0.63 per cent. Recreation, sport and culture recorded inflation of 1.64 per cent.
Telangana Records Highest State Inflation
State-level data showed a wide variation in inflation across India. Telangana recorded the highest combined CPI inflation at 6.32 per cent in July, followed by Andhra Pradesh at 5.72 per cent and Tamil Nadu at 5.44 per cent.
Madhya Pradesh recorded inflation of 4.91 per cent, while Karnataka stood at 4.89 per cent. Rajasthan recorded 4.82 per cent and Uttar Pradesh 4.74 per cent.
At the lower end, Mizoram recorded combined inflation of 1.84 per cent, followed by Meghalaya at 2.31 per cent and Tripura at 2.32 per cent.
Inflation Risks May Keep RBI Cautious
The July inflation reading comes a week after the RBI’s Monetary Policy Committee kept the benchmark repo rate unchanged at 5.25 per cent at its 5 August meeting and retained a neutral policy stance. The latest CPI data gives the central bank a fresh assessment of price pressures, particularly as food inflation has accelerated and rural inflation remains higher than urban inflation.
“From a monetary policy perspective, July inflation is unlikely to warrant an immediate change in stance, with policy rates expected to remain stable in the near term. However, persistent food and input-cost pressures could prompt greater caution from the central bank, making the inflation outlook increasingly data-dependent,” said Vivek Rathi, National Director- Research, Knight Frank India.
Sabnavis expects inflation to remain elevated over the coming quarters.
“We project inflation to be 5.2 per cent for the year with an upward bias and are working on one rate hike in the year. This also goes with the RBI inflation forecasts for Q3 and Q4 of this year and Q1 of next year being above 5 per cent and averaging 5.5 per cent,” he said.
Aditi Nayar, Chief Economist, ICRA, expects CPI inflation to rise to 4.7 per cent in August and cross 5 per cent in September as the base effect turns unfavourable. ICRA expects inflation to average 5 per cent in FY2027, in line with the MPC’s forecast, while prolonged tensions in West Asia and the monsoon outcome pose upside risks. Nayar said immediate policy tightening was unlikely, but elevated inflation projections through the coming quarters could make a rate hike the next move if inflationary pressures broaden. A generalisation of price pressures could potentially prompt a rate increase at the RBI’s December 2026 meeting.
“CPI inflation remains within the RBI tolerance band of 4 ± 2 per cent India’s domestic demand continues to be buoyant, exports remain robust and industrial production continues to grow steadily. Coupled with RBI’s prudent monetary measures, India’s economy shows resilience,” said Ranjeet Mehta, SG & CEO, PHDCCI.
