Retail inflation was flat in India between June and July, barely changing from 4.38% in June to 4.45% in July. A Bloomberg poll of economists expected this number to be 4.5%. This vindicates the position of RBI ’s Monetary Policy Committee ( MPC ), which ruled out any widespread inflation pressure in the economy in its meeting held last week. The latest inflation reading is also in line with analyst expectations.
How It Works
Most of the recent increase in inflation has been in food and fuel prices, as can be seen in the trends in core and non-core inflation. Core inflation measures the non-food non-fuel part of the CPI basket and is immune to seasonal fluctuations. The plateauing of retail inflation numbers, as measured by the annual change in Consumer Price Index (CPI), follows a continuous rise in monthly data in the new inflation series which has a base year of 2024. Data from the Centre for Monitoring Indian Economy (CMIE) shows that inflation fell to a near-zero level (0.04%) in October 2025 and has risen every month since to 4.45% in July. Core inflation in July 2026 was 4%, the same as in June and not very high from the 3.3% in January, the earliest period for which data is available in the new series, according to CMIE data. Non-core inflation, on the other hand, increased from 1.9% in January to 5.1% in July. Food inflation increased from 2.1% to 5.2% between January and July. Food items have a 36% weight in the new CPI basket. LPG and PNG inflation (with a combined weight of 1.98%) has increased from 1.7% in January to 5% in July. MPC’s latest forecast, which was released earlier this month, expects annual CPI inflation to be 5% in 2026-27 with quarterly values being 4.7%, 5.9% and 5.5% in the quarters ending September 2026, December 2026 and March 2027. Inflation for the June quarter came at 4.3%, which was 30 basis points (one basis point is one hundredth of a percentage point) lower than RBI estimate.
Because of the war in West Asia, while fuel is not a consolidated category in CPI data, it have nevertheless seen an increase in inflation.
