India’s retail inflation rose 37 basis points in August, with food inflation climbing to 5.95 per cent, led by sharp increases in ginger, onion, garlic, sugar and edible oils
India’s retail inflation rose to 4.82 per cent in August 2026 from 4.45 per cent in July, marking a 37-basis-point increase and the third consecutive monthly rise, according to provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday. Food inflation also accelerated during the month, increasing to 5.95 per cent from 5.52 per cent.
The August inflation reading remained above the Reserve Bank of India’s 4 per cent medium-term target, although it was within the central bank’s statutory 2–6 per cent tolerance band. Rural inflation increased to 5.23 per cent from 4.84 per cent in July, while urban inflation rose to 4.31 per cent from 3.96 per cent over the same period.
“Third Consecutive Rise in Inflation- Concern But Not Consternation. India’s August retail inflation of 4.82 per cent—up from 4.45 per cent in July—marks a third consecutive reading above the RBI’s 4% medium-term target. This shows that price pressures have become entrenched rather than a one-month aberration, making the RBI’s policy trade-off difficult. The sharper rise in food inflation to 5.95 per cent, from 5.52 per cent in July, is worrisome since food has a large weight in household consumption, especially for poorer and rural households, so the headline number understates the loss of purchasing power faced by those whose expenditure is concentrated in essentials,” said Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating.
Food Inflation Hits 19-Month High
Food inflation, measured through the Consumer Food Price Index (CFPI), rose to 5.95 per cent in August from 5.52 per cent in July. On a sequential basis, the all-India CFPI increased 0.92 per cent during August, slightly slower than the rise recorded in July. Food inflation had remained in negative territory for seven consecutive months through December 2025.
The August food inflation reading was the steepest in 19 months when the current and earlier Consumer Price Index series are considered together. Under the revised CPI series introduced in January 2026 with 2024 as the base year, food inflation stood at 2.13 per cent in January, showing the acceleration in food-price pressures through the year.
Rural food inflation increased to 6.13 per cent in August from 5.79 per cent in July, while urban food inflation rose to 5.64 per cent from 5.05 per cent. The sharper rural increase comes as food accounts for a significant share of household consumption, making changes in prices of staples and other essential items particularly relevant to rural purchasing power.
The increase in food prices was driven by several key items. Ginger recorded inflation of 73.82 per cent, onion 48.27 per cent and garlic 43.60 per cent in August, while sugar prices increased 24.20 per cent and chicken prices rose 14.12 per cent. Mustard oil recorded inflation of 6.92 per cent, while vegetable oils as a category rose 8.8 per cent.
Rice inflation also accelerated sharply, rising to 5.88 per cent in August from 3.30 per cent in July. The increase comes against a backdrop of weaker paddy sowing during the ongoing kharif season, with the area under paddy reported at 42.68 million hectares, around 4 per cent lower than the corresponding period of the previous year, according to agriculture ministry data.
Overall kharif sowing, covering paddy, pulses, oilseeds, cotton, sugarcane and coarse cereals, stood at 109.49 million hectares, 1.4 per cent below the previous year. Erratic rainfall and uneven distribution across regions have raised concerns over crop yields, with potential implications for prices of rice, pulses and other agricultural commodities in the coming months.
Despite the broad-based increase in food inflation, several vegetables recorded year-on-year price declines. Tomato prices fell 31.09 per cent in August and potato prices declined 13.14 per cent, while lady finger prices fell 5.41 per cent. Wheat and chana recorded comparatively moderate inflation of 0.86 per cent and 0.32 per cent, respectively.
“We project food and beverage inflation to harden further, crossing the 7.0%-mark by October 2026, which would exert upward pressure on the headline inflation number,” said Aditi Nayar, Chief Economist, ICRA.
Sugar prices have also come under pressure from supply-side factors, with lower-than-expected sugarcane yields and increased diversion of sugarcane towards ethanol production tightening domestic sugar availability. Alongside domestic factors, elevated international edible-oil prices have added to food-price pressures, while global energy prices have remained volatile amid the conflict in the Middle East.
“Food prices shock due to prices being elevated because of the end-of-season phenomenon as well as international prices being high as in the case of edible oils,” said Madan Sabnavis, Chief Economist, Bank of Baroda.
Monsoon Adds To Food Price Risks
Rainfall has emerged as another potential source of food-price pressure. The June-September monsoon was 14.7 per cent below the benchmark by Monday, with the season expected to be classified as deficient if overall rainfall remains below 90 per cent of the long-period average. The current season could potentially record the lowest rainfall since 2009.
“Going forward, we expect headline inflation to stay range-bound near 4.5-5.0 per cent, with food the key swing factor amid uneven monsoon and El Niño-related uncertainty. The main risk is that high wholesale food and input costs eventually push up retail prices, alongside any rise in crude oil or fresh volatility in vegetable prices,” said Rajeev Sharan, Head of Research, Brickwork Ratings.
Food and beverages inflation stood at 5.66 per cent in August, while transport inflation was 4.60 per cent and clothing and footwear inflation stood at 3.56 per cent. Education services recorded inflation of 3.73 per cent, while housing, water, electricity, gas and other fuels recorded inflation of 2.61 per cent during the month.
“With costs of staple food items skyrocketing, the cost pressures on the food and beverage industry, including food processing and restaurant and other services are imminent,” said Mr. Rajeev Juneja, President, PHDCCI.
Restaurants and accommodation services recorded inflation of 8.38 per cent in August, while personal care, social protection and miscellaneous goods and services recorded inflation of 15.17 per cent. Health inflation stood at 1.34 per cent, while furnishings, household equipment and routine household maintenance recorded inflation of 2.68 per cent during the month.
Precious Metals See Sharp Price Inflation
Inflation in precious-metal-related jewellery remained particularly high during August. Silver jewellery recorded inflation of 107.11 per cent, the highest among individual items listed in the CPI data, while gold, diamond and platinum jewellery recorded inflation of 35.53 per cent. Motor cars and jeeps, meanwhile, recorded deflation of 6.72 per cent.
“Demand for precious metals is going to take a hit during the upcoming festival and wedding season in coming months if prices remain elevated. The Public’s decision to spend on durable goods in coming months will set the expectations for inflation impacting Personal Consumption Expenditure going forward,” said Dr. Ranjeet Mehta, SG and CEO, PHDCCI.
At the state level, Telangana recorded the highest combined CPI inflation at 6.27 per cent in August, followed by Dadra and Nagar Haveli and Daman and Diu at 6.22 per cent. Tamil Nadu recorded inflation of 5.92 per cent, Puducherry 5.85 per cent and Madhya Pradesh 5.55 per cent during the month.
Among other major states, Andhra Pradesh recorded inflation of 5.53 per cent, Odisha 5.52 per cent, Rajasthan 5.24 per cent, Karnataka 5.23 per cent, Uttar Pradesh 5.09 per cent and Gujarat 4.94 per cent. Kerala recorded inflation of 4.67 per cent and Maharashtra 4.78 per cent in August.
Inflation was comparatively lower in Delhi at 2.61 per cent and West Bengal at 3.28 per cent. Bihar recorded inflation of 4.22 per cent, while Punjab stood at 4.45 per cent, according to provisional state-level CPI data released by the National Statistical Office. The wide variation indicates differences in price movements across states.
New CPI Series Changes Food Weight
The August release was compiled under the revised Consumer Price Index series, which uses 2024 as its base year and incorporates consumption patterns from the Household Consumption Expenditure Survey 2023-24. Under the new series, the weight of the CFPI in the overall CPI basket has declined to around 36.73 per cent from 45.86 per cent under the earlier 2012-base series.
The change in weights means food has a lower relative contribution to the headline CPI compared with the previous series, although food prices remain an important source of inflationary pressure. The revised series has been in use since January 2026 and is intended to reflect more recent household consumption patterns in the inflation basket.
The combined CPI index rose to 108.74 in August from 107.95 in July. The rural index increased to 109.27 from 108.34, while the urban index rose to 108.07 from 107.45, indicating an increase in the overall price level across both rural and urban markets during the month.
The August CPI data was compiled using price information collected from 1,407 urban markets, including online markets, and 1,465 villages across States and Union Territories. Field Operations Division staff of the National Statistical Office collected prices through personal visits according to a weekly roster, with the response rate reported at 100 per cent across both rural and urban markets.
The Ministry said the indices and inflation rates were calculated using actual unrounded values, while published indices were rounded to two decimal places. The August release remains provisional, with subsequent revisions possible as part of the statistical process followed for compiling the Consumer Price Index.
Wholesale-Retail Inflation Gap
Wholesale inflation rose to 9.92 per cent in August, remaining substantially above the retail inflation rate of 4.82 per cent. According to Sharan, the gap partly reflects producer-level fuel and metals pressures that have not fully passed through to consumers, while the composition of the CPI, including services and retail fuel pricing, also affects the comparison.
“Notably, wholesale inflation at 9.92 per cent runs well above retail, but this gap largely reflects producer-level fuel and metals pressures that are not fully reaching consumers, given that CPI is services-heavy and retail fuel prices remain cushioned,” said Sharan.
“Although 4.82 per cent is within the RBI’s statutory 2–6 per cent tolerance band, the uneasy mix of accelerating food prices and prior evidence of firming core inflation narrows room for monetary easing; policy must distinguish temporary weather- and supply-driven food shocks from broader demand and fuel-cost spillovers before treating the rise as a case for higher interest rates,” said Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating.
