Overview
India’s retail inflation rose to 4.45% in July 2026, up from 4.38% in June. This is the highest level in 19 months, since December 2024, and marks the second straight month above the RBI’s 4% target, though still within the 2‑6% tolerance band.
Key Developments
- Food, fuel and transport remain the main price drivers.
- Rural food inflation climbed to 5.79% (from 5.45%); urban food inflation slipped slightly to 5.05%.
- Staples such as onion (+22.54%), garlic (+35.36%) and ginger (+83.62%) pushed food prices higher, while potato (‑16.56%) and tomato (‑4.59%) provided some relief.
- Transport inflation accelerated to 4.43% and transport services for goods rose to 7.77%.
- Commercial LPG prices were cut by ₹183 on July 1 and by a further ₹202 on August 1, but menu prices have not yet fallen.
- Food‑and‑beverage services inflation jumped to 7.75% in July.
- Monsoon rains remain deficient in western, central and southern regions, threatening agricultural supply.
- Precious metals inflation stayed high: gold (+32.98%) and silver (+109.84%).
- Rupee depreciated about 1.6% between the June 15 and July 15 CPI reference dates, adding to imported inflation.
- HSBC composite PMI fell to 54.3 in July, its weakest expansion since March 2022.
Important Facts
The core inflation stayed below 3%, indicating that underlying price pressures are moderate. However, supply‑side factors—such as higher input costs for transport, ongoing monsoon deficits, and geopolitical risks affecting Russian crude—continue to push headline inflation upward.
Russia supplied nearly half of India’s crude imports in