India’s consumer price inflation is likely to climb to a 20‑month high in August, according to a Reuters poll of 44 economists conducted between September 3 and 9. The poll forecasts the headline CPI at 4.80%, up from 4.45% in July, with individual forecasts ranging from 4.40% to 5.05%.
Key drivers: food and fuel
The rise is expected to be driven primarily by elevated food prices and a further increase in fuel inflation, said Kanika Pasricha, chief economic adviser at Union Bank of India. An erratic monsoon disrupted food supplies, pushing up the cost of essentials such as sugar, cereals, milk, edible oils, eggs and meat. Global crude prices, now nearing $100 a barrel, and higher cooking‑gas rates added additional pressure.
RBI’s stance
Even with inflation remaining within the Reserve Bank of India’s 2‑6% target band, the central bank kept interest rates unchanged last month. Minutes from its latest meeting signaled readiness to tighten policy if price pressures broaden, but officials do not expect a rate hike until next year.
Specific price impacts
Sugar prices hit a record high in August and are estimated to have added at least 15 basis points to headline inflation. India’s ban on sugar exports, introduced in May to cool domestic prices, will stay in place until the end of September.
While many food items rose, persistent year‑on‑year declines in potato and pea prices helped offset some of the increase, limiting the overall rise in headline inflation.
Core and wholesale inflation
Core inflation – which excludes volatile food and fuel components – is expected to rise to 4.1% in August, though India does not publish an official core measure. Wholesale price inflation is projected to edge up to 9.89% from 9.78% in July, hovering around the 10% mark for a fourth straight month.
Future rate outlook
A separate Reuters poll conducted last month suggested the RBI is likely to raise rates by 25 basis points in the second quarter of 2027, with a further increase in the fourth quarter, taking the policy rate to 5.75%.
These projections underscore the delicate balance the RBI must maintain between supporting growth and containing price pressures as India navigates a challenging global commodity environment.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
