India Retail Inflation Rises to 2.07% in August Within RBI Target

Retail inflation in India rose to 2.07% in August 2025 from 1.61% in July, primarily due to higher prices of vegetables, meat, fish, oil, fats, and personal care products, according to government data. Despite this increase, inflation remains within the Reserve Bank of India's target band of 2% to 6%, offering the central bank flexibility to ease monetary policy if needed. The consumer price index inflation for August 2024 was 3.65%, with a year-on-year inflation rate showing a slight deflation of -0.69% for August 2025 over the previous year. Inflation pressures come amid challenges from U.S. tariffs on Indian imports, which may reduce GDP growth by 0.6 percentage points, prompting the Indian government to implement goods and services tax cuts to boost domestic consumption. Economists expect these tax cuts to improve household spending power and reduce inflation further if retailers pass on the benefits to consumers. Major companies, including Tata Motors and Maruti Suzuki, have already announced price reductions in response to these tax changes.