India’s inflation rate ticked up for the first time in nearly a year, though it remains within the Reserve Bank of India’s (RBI) comfort zone. According to the Ministry of Statistics, the Consumer Price Index (CPI) rose 2.07% year-on-year in August 2025, compared to 1.61% in July. The figure was slightly below the 2.11% median estimate in a Bloomberg survey of economists.
The RBI’s inflation target is between 2% and 6%, and analysts say the current benign levels may still allow space for a repo rate cut if growth slows under pressure from new US tariffs.
Growth Concerns
India’s economy expanded 7.8% in April–June, its fastest pace in over a year. However, Citigroup economists warn US trade tariffs could shave 60–80 basis points off annual growth. While the RBI left rates unchanged in its August meeting, many expect policymakers to revisit easing in December if downside risks worsen.
Expert Views
- Upasna Bhardwaj (Kotak Mahindra Bank) expects the RBI to pause in October but sees “scope for cuts by December” if global conditions soften.
- Teresa John (Nirmal Bang Equities) believes rates could fall as much as 50 basis points in 2025, especially with recent GST reductions helping ease inflationary pressure further.
With inflation still subdued and growth risks mounting, markets will closely watch the RBI’s October 1 policy meeting, which could set the tone for India’s monetary stance in the months ahead.
