Food inflation climbed to 5.52% year-on-year, pushing India’s July CPI above the RBI’s midpoint target but within its 2–6% band.
India’s Consumer Price Index inflation increased to 4.45% year-on-year in July, up from 4.38% in June, driven by a 5.52% surge in food prices. The print remains within the Reserve Bank of India’s 2–6% tolerance range but exceeds its 4.0% midpoint target for the second consecutive month.
Analysts at MUFG and DBS Group Research agree the RBI’s decision to hold the repo rate at 5.25% was justified, though they diverge on future policy. MUFG warns of broadening price pressures from strong domestic demand, while DBS highlights stable core inflation and bond yields.
MUFG projects a 50-basis-point hike cycle starting December 2026, while DBS expects an extended pause. Risks include weather shocks and accelerating credit growth, though stable 10-year government bond yields (6.75–6.85%) provide market support.