Reserve Bank of India holds rates at 5.25% despite accelerating inflation driven by higher food prices.
India’s Consumer Price Index inflation increased to 4.45% year-on-year in July, up from 4.38% in June, driven by a sharp rise in food inflation to 5.52%. The Reserve Bank of India maintained its benchmark rate at 5.25% but signaled potential future hikes to curb price pressures.
Food inflation, a key component of the CPI basket, accelerated from prior months, offsetting moderation in other segments. Analysts had expected a slight uptick in headline inflation but noted persistent risks from volatile food prices and global commodity trends.
Markets remain watchful for the RBI’s next policy moves, with rate hikes still under consideration if inflationary pressures persist.