Retail inflation in food and beverages rose to 5.66% in August 2026, and products, including eggs, meat, fruits and nuts, and sugar registering double-digit inflation in the month.
While there was a broad-based uptick in inflation across all 13 sectors tracked, the sharpest rise was in the category of personal care, social protection, and miscellaneous goods and services, which registered 15.17% rise in inflation on a year-on-year basis in August.
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Meanwhile, wholesale price index-based inflation also rose to 9.92% on a year-on-year (YoY) basis, compared to 9.78% in July 2026.
Based on these trends, analysts expect a further hardening of prices in the coming months and expect retail inflation to be higher than the Reserve Bank of India’s forecast of 4.7% for the second quarter of the fiscal year.
Rajeev Sharan, Head of Research, Brickwork Ratings, noted that wholesale inflation at 9.92% runs well above retail, but this gap largely reflects producer-level fuel and metals pressures that are not fully reaching consumers, given that CPI is services-heavy and retail fuel prices remain cushioned.
“Going forward, we expect headline inflation to stay range-bound near 4.5-5%, with food the key swing factor amid uneven monsoon and El Niño-related uncertainty. The main risk is that high wholesale food and input costs eventually push up retail prices, alongside any rise in crude oil or fresh volatility in vegetable prices,” he said.
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With global crude prices hardening once again, there is also an expectation that India will increase retail prices again to offset some of the losses to oil marketing companies.
Notably, the average price of the Indian basket of crude oil has been higher than global prices at $107.66 per barrel in September so far. On September 11, the average price of the Indian basket of crude oil was $119.69 per barrel.
Aditi Nayar, Chief Economist and Head—Research & Outreach at ICRA, said the agency expects CPI inflation prints to cross the 5%-mark in September 2026, and harden further to around 6% during October-November 2026, the upper limit of the MPC’s medium-term target band, partly on account of the GST rationalisation-led low base.
“Overall, the CPI print for August 2026 has come in a tad higher than expected. If crude oil prices remain elevated in the run up to the upcoming MPC meeting, hinting at an impending upward revision in the Retail Selling Prices (RSP) of petrol and diesel, which could percolate into generalised price pressures, then the expected rate hike could get preponed to October 2026 from December 2026,” she said.
The next meeting of the Monetary Policy Committee of the RBI is from October 5-7.
