Retail Inflation of India Rises to 2.1%: A Detailed Analysis of August 2025 CPI Data
UPSC Relevance
Prelims: Indian Economy (Inflation and its types - CPI, WPI; Monetary Policy - RBI, MPC; Fiscal Policy).
Mains:
General Studies Paper 3 (Economy): Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Inflation and its management. The relationship between inflation, growth, and RBI's monetary policy is a core theme in GS3.
Key Highlights from the News
In August 2025, India's Retail inflation, as per the Consumer Price Index (CPI), rose to 2.1%, up from 1.55% in July.
This marks an increase in inflation after nine consecutive months of decline.
This rate is slightly above the lower tolerance band of 2% - 6% set by the Reserve Bank of India (RBI).
Food inflation remained very low at 0.05%, primarily due to a significant fall in the prices of vegetables and pulses. However, edible oil prices increased.
Economists believe that the recently announced GST rate reduction will help control future price increases.
Experts state that since inflation is still under control, the RBI is unlikely to change interest rates in the next Monetary Policy meeting (policy pause), but there is a possibility of rate cuts if growth slows down by December.
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