Food and gold prices drive the uptick; RBI faces balancing act
India’s retail inflation has edged higher after a prolonged nine-month decline, raising eyebrows among policymakers and economists alike. According to provisional data, the Consumer Price Index (CPI) rose to 2.1% in August, up from 1.55% in July.
This increase, though modest, comes after months of unusually low inflation largely driven by base effects. Economists attribute the uptick to rising food and commodity costs. Prices of vegetables and pulses firmed up in August, while international gold prices surged over 5%, adding weight to core inflation.
Despite the rise, inflation still sits comfortably below the Reserve Bank of India’s 4% target, offering the central bank some breathing room. Analysts, however, caution that rural consumption trends and input costs could dictate the trajectory going forward.
“While current numbers look benign, early signs of food-driven price pressure cannot be ignored,” noted a Mumbai-based economist. “The RBI may hold its stance for now but will tread carefully.”
For households, the uptick is already being felt in kitchen budgets. A vendor at Delhi’s Azadpur Mandi remarked that wholesale onion and tomato prices have climbed by 15–20% in recent weeks. Global cues also matter. Energy price volatility and tariff uncertainties, particularly after the U.S. raised duties on Indian goods, could filter through to domestic inflation.
The final CPI figures, due later this week, will be key in shaping the RBI’s monetary policy review. The consensus expectation is that the central bank will prioritize growth stability, while keeping a close watch on inflation signals from food and global commodities.