Capital Market has conducted a poll amongst economists across leading banks, rating agencies, financial advisories and brokerages for August 2025 CPI inflation projections. The results of the poll as indicated by the median of CPI inflation forecasts from economists, shows that CPI inflation would rebound to 2.4% in August 2025 from 1.55% reading in July 2025.

The economists in the poll have projected the CPI inflation in the range of 2.33% to 2.54% for August 2025. The median of various CPI inflation forecast received from economists stood at 2.4%, while the was also at 2.4% for August 2025.

CPI Inflation: July 2025

The all-India general CPI inflation declined to 1.55% in July 2025 (new base 2012=100), compared with 2.10% in June 2025. The corresponding provisional inflation rate for rural area was 1.18% and urban area 2.05% in July 2025 as against 1.72% and 2.56% in June 2025. The core CPI inflation declined to 4.22% in July 2025 compared with 4.53% in June 2025. The cumulative CPI inflation has eased to 2.69% in April-July FY2026 compared with 4.91% in April-July FY2025.

Among the CPI components, inflation of food and beverages declined to (-) 0.84% in July 2025 from (-) 0.15% in June 2025. Within the food items, the inflation for vegetables declined to (-) 20.69%, cereals and products 3.03% and pulses and products (-) 13.76%. Further, the inflation for milk and products declined to 2.74%, sugar and confectionery 3.28%, egg 2.26% and prepared meals, snacks, sweets etc. 4.35%. However, the inflation for fruits rose to 14.42%, meat and fish (-) 0.61%, oils and fats 19.24%, non-alcoholic beverages 4.60% and spices (-) 3.07% in July 2025.

The inflation for housing declined to 3.17%, while that for miscellaneous items eased to 5.01% in July 2025. Within the miscellaneous items, the inflation for transport and communication declined to 2.12%, education 4.00% and recreation and amusement 2.38%, while the inflation for health increased to 4.57%, personal care and effects 15.12% and household goods and services 2.61% in July 2025.

The inflation for clothing and footwear declined to 2.50%, while the CPI inflation of fuel and light rose to 2.67% in July 2025.

FAO Food Price Index: August 2025

The benchmark of world food commodity prices remained largely unchanged in August, as increases in meat, sugar and vegetable oil prices offset declines in cereal and dairy quotations, according to the favorable Food and Agriculture Organization of the United Nations (FAO). The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, was marginally up in August from July level and 6.9% higher than a year earlier.

The FAO Vegetable Oil Price Index increased by 1.4% in August from July, reaching its highest level in over three years. Palm, sunflower and rapeseed oil quotations all increased, partly influenced by Indonesia’s intention to further raise its biodiesel blending mandate next year, while world soy oil prices edged lower amid prospects of ample global soybean supplies in the marketing year ahead.

The FAO Cereal Price Index declined by 0.8% from July. International wheat prices dropped, driven by larger harvests in the European Union and the Russian Federation, while world maize prices rose, due partly to increased demand for feed use and ethanol production in the United States of America. The FAO All Rice Price Index eased, weighed down by lower Indica prices amid continued fierce competition among exporters.

The FAO Meat Price Index increased by 0.6% in August, reaching a new all-time high, led by rising international bovine meat prices, underpinned by strong demand in the United States of America and robust import demand from China, which respectively boosted Australian and Brazilian export quotations. Ovine prices also rose, pig meat prices remained broadly stable, while poultry meat quotations declined amid ample exportable supplies from Brazil.

The FAO Dairy Price Index declined by 1.3% from July, with butter, cheese and whole milk powder quotations down amid subdued import demand from key Asian markets.

The FAO Sugar Price Index rose slightly, by 0.2% from July after five consecutive monthly declines, driven primarily by concerns over sugarcane production and yields in Brazil, as well as stronger global import demand. Prospects for larger crops in India and Thailand contained the price increase.

Outlook

The WPI inflation declined further and CPI inflation also declined sharply in July 2025. The core CPI inflation also moderated in July 2025 from June 2025 level. The CPI inflation has declined for the ninth consecutive month to a 97-month low of 1.55% in July 2025 driven primarily by a sharp decline in food inflation. The CPI for July 2025 was second lowest for current base year data available for last 139 months and slightly above the lowest level of 1.46%. Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to moderation in food inflation and overall inflation. RBI projects CPI inflation for 2025-26 at 3.1% with lower inflation for Q2 and Q3FY26. CPI inflation, however, is likely to edge up by Q4 of 2025-26 and beyond, as unfavourable base effects, and demand side factors coming into play from policy actions.