Trends & Tides – India CPI August 2025
India’s Consumer Price Index (CPI) inflation rose to 2.07% YoY in August 2025, up from 1.61% in July, as food prices moved out of deflation.
Food inflation increased to 0.05% YoY in August 2025 from -0.84% YoY in July. Within food, vegetable inflation rose to -15.9% YoY from -20.7% YoY in the previous month. Vegetables exerted a smaller drag on headline inflation, while the contribution from other segments was largely flat.
Core inflation (excluding food and fuel) remained steady at 4.2% YoY, primarily supported by higher gold prices. Excluding gold and silver, core inflation was more moderate at 3.0% YoY, indicating that underlying inflationary pressures remain muted.
The monsoon season so far has been above normal, though regional disparities remain wide. East and Northeast India have witnessed deficient rainfall, while Northwest India has recorded a heavy surplus.
We expect inflation to undershoot the RBI’s latest projection of 3.1% YoY for FY26. Crop destruction due to flooding in certain regions poses upside risks to inflation, while tax cuts under GST 2.0 present downside risks.
