India’s CPI inflation accelerated to 2.07% YoY in Aug-25 from 1.61% in Jul-25.
Download ReportQuantEco Research | Aug-25 CPI - Benign inflation is here to stay
India’s CPI inflation accelerated to 2.07% YoY in Aug-25 from 1.61% in Jul-25. While CPI inflation is now back to the policy target band after breaching the lower tolerance threshold of 2%, it has notably undershot the 4% target for seven months in a row. A soft trajectory for food inflation remains a likelihood amid satisfactory overall progress of the south-west monsoon season and a restrained MSP hike for kharif crops. More importantly, the lowering of GST rates on several items from Sep 22nd will impart a strong disinflationary impulse over H2 FY26 and H1 FY27. Although upside risk to inflation stems from unevenness in the monsoon spread, INR depreciation, and a stronger-than-anticipated consumption recovery, on a net basis, we revise lower our forecast of FY26 CPI inflation to 2.6% from 3.0% earlier.