India's retail inflation rises to 4.82% in August
What's the story
India's retail inflation surged to 4.82% in August, up from July's 4.45%, according to government data released today. The spike was mainly driven by rising food prices and other key components of the consumer basket. This is the first major jump in inflation after a relatively stable first half of the year. A Reuters poll had predicted a retail inflation rate of 4.8% for August, with estimates ranging between 4.4% and 5.05%.
Price pressure
Sugar prices hit record high in August
Sugar prices hit a record high in August, likely impacting the overall inflation rate.
India's ban on sugar exports to control domestic prices, which started in May, will continue until the end of September.
The Reserve Bank of India (RBI) is tasked with keeping headline retail inflation at 5% for FY27.
In June, retail inflation had breached RBI's medium-term target of 4%.
Inflation rise
Retail food inflation climbed to 5.95%
Retail food inflation climbed to 5.95% in August from July's 5.52%. Rural food inflation stood at 5.64%, while urban food inflation was higher at 6.13%.
The RBI has revised its FY27 inflation forecast downward to 5% from an earlier estimate of 5.1%.
This revision was made during the central bank's Monetary Policy Committee (MPC) meeting on August 5, citing softer global crude oil prices and easing supply-side pressures as reasons for the adjustment.
Inflation projections
RBI revised quarterly inflation projections
The RBI also revised its quarterly inflation projections, cutting CPI inflation for Q1 to 4.1% from an earlier estimate of 4.2%.
The forecast for Q2 was lowered to 4.7% from June's prediction of 5.1%.
However, the Q3 projection remained unchanged at 5.9%, while the estimate for Q4 was marginally increased to 5.5% from an earlier estimate of 5.4%.
The central bank also lowered its FY27 core inflation forecast to 4.3% from an earlier estimate of 4.7%.