Inflation remains under RBI's tolerance level, to maintain price stability: Experts

New Delhi, Sep 12 The consumer price index-based (CPI) inflation, which stood under the Reserve Bank of India's (RBI) tolerance level of 2-6 per cent in August amid an unfavourable geo-political situation, will maintain price stability, industry experts said on Friday.

CPI inflation stood at 2.07 per cent for the month despite unfavourable geopolitical situations.

"Year-on-year CPI inflation for August stood within RBI’s tolerance limit, despite international policy uncertainties," said Hemant Jain, President, PHDCCI.

The year-on-year inflation rate, based on the All-India Consumer Food Price Index (CFPI), stood at –0.69 per cent (provisional) in August 2025 compared with August 2024, supporting the prevailing low CPI inflation, Jain noted.

He further highlighted that the softening in the prices in August 2025 for cereals and products, pulses and products, as well as moderation in clothing and footwear, housing, and fuel and light, in comparison to July 2025, have collectively helped keep inflation within the RBI tolerance level.

Madhavi Arora, Chief Economist, Emkay Global Financial Services, said the continued spate of inflation undershoot against RBI’s estimates would ensure FY26 inflation will likely undershoot RBI’s estimates by at least 50 basis points.

Besides, the disinflationary bias may be increased further amid domestic GST rate cuts ahead.

"We assert the RBI's focus on 1-year ahead expected inflation appears increasingly misplaced in an evolving world – particularly as the global landscape continues to shift toward a disinflationary bias in Asia," she added.

India’s CPI rose in August 2025 from 1.6 per cent in July 2025, but the inflation backdrop remains benign.

"The uptick was largely food-driven, reflecting seasonal volatility, while inflation in housing, health, education, transport and fuel eased, pointing to softer core pressures," according to Mahendra Patil, Founder and Managing Partner, MP Financial Advisory Services LLP.

According to Arsh Mogre of PL Capital, the disinflationary momentum has been amplified by favourable supply-side conditions and good monsoon. With the GST reforms, even a 50–60 per cent pass-through could shave 20–30 bps off FY26 inflation from current projections.

According to data released by the Ministry of Statistics, CPI-based inflation rate increased marginally to 2.07 per cent in August, despite food prices continuing to drop throughout the month, which lessened the burden on the average person.

The headline inflation rate in August was slightly higher than the 1.61 per cent retail inflation rate in July of this year, which was the lowest level since June 2017.

The RBI can continue to use the soft money policy to promote growth, though, because the inflation rate is well below its target rate of 4 per cent.

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