India’s retail inflation likely held steady at 4.4% in July 2026 despite a broad-based increase in food prices, according to a Mint poll of 18 economists.
A favourable base, with Consumer Price Index (CPI)-linked inflation having eased from 2.3% in June 2025 to 1.6% in July 2025, helped offset some of the upward pressure from food prices.
Economists expect CPI inflation to come in between 4.3% and 4.6% in July, with all but two forecasting a marginal pick-up from the previous month. The median estimate, if realized, would mark the second consecutive month above the Reserve Bank of India’s (RBI) 4% medium-term target.
The official data is scheduled to be released on 12 August.
Primary trigger
Most economists expect the headline reading to edge up from June, with higher food prices accounting for much of the upward pressure. The increase, however, is expected to be modest, leaving headline inflation broadly unchanged at 4.4%.
“CPI inflation is likely to remain unchanged in July, with upward pressure largely contained to food and fuel,” said Gaura Sen Gupta, chief economist at IDFC First Bank. Underlying price pressures, as reflected by core-core inflation, which excludes food, fuel and precious metals, remained low at 2.1% in July, only marginally higher than 2% in June, she added.
Food, which accounts for nearly 35% of the CPI basket, is particularly sensitive to monsoon-influenced supply conditions. “The improvement in monsoon activity during July, though, supported crop conditions, but did little to ease near-term supply concerns as the recovery remained uneven across states, and failed to contain the hike in food prices during the month,” said Kanika Pasricha, economist at Union Bank of India, in a report dated 6 August.
Looking ahead, recent trends in monsoon rainfall and kharif sowing offer some comfort, but uncertainty remains over the monsoon’s performance through the rest of the 2026 season.
Despite flagging risks from uneven monsoon patterns and volatile global oil prices, the central bank lowered its full-year inflation forecast at its August monetary policy meeting to 5% from 5.1% earlier. It also cut its Q2 forecast to 4.7% from 5.1%, while retaining its Q3 projection at 5.9% and marginally raising its Q4 forecast to 5.5% from 5.4%.
With inflation expected to evolve more slowly than previously anticipated, at least through December, the Monetary Policy Committee (MPC) has room to remain on hold for now. It kept the policy repo rate unchanged at 5.25% for the fourth consecutive policy meeting.
The food-led nature of the inflationary pressure should keep the MPC in wait-and-watch mode, said Sujan Hajra, chief economist at Anand Rathi Group. He expects the repo rate to remain unchanged, with policy staying data-dependent and carrying a mildly hawkish bias.