India July CPI Inflation Rises to 4.45%, Stays Above RBI Target for Second Month

India’s retail inflation climbed to 4.45% year-on-year in July 2026, up from 4.38% in June, according to data released by the National Statistics Office. The reading marks the highest level in 19 months and the second consecutive month above the Reserve Bank of India’s 4% medium-term target. The increase came in below the market forecast of 4.5% and remains within the RBI’s broader 2-6% tolerance band.

CPI Inflation: How Inflation Moved From June 2026 vs July 2026

Rural CPI is rising faster than urban and remains significantly higher across both headline and food categories.

India CPI Inflation Trend: January to July 2026

Inflation has risen steadily since the start of the year, moving from a low of 2.74% in January to 4.45% in July, an increase of approximately 1.7 percentage points in seven months.

The period of low inflation seen in early 2026 has clearly moderated, with the direction of travel now consistently upward.

Which Food Items Rose and Which Fell in July 2026?

The Consumer Food Price Index rose to 5.52% in July from 5.32% in June. Rural food inflation stood at 5.79%, against 5.05% in urban areas. The movement across individual items was uneven.

Categories with sharp increases:

• Ginger: 83.62%
• Garlic: 35.36%
• Onion: 22.54%
• Silver jewellery: 109.84%
• Gold, diamond and platinum jewellery: 32.98%

Categories still recording deflation:

• Potato: -16.56%
• Lady’s finger: -5.52%
• Peas: -5.27%
• Tomato: -4.59%

Services Inflation in July 2026: Restaurants, Transport and Personal Care Stay Elevated

Several service categories continued to show relatively firm price growth in July. Unlike food prices, services inflation does not reverse quickly when supply conditions improve, making it a more persistent contributor to the headline number.

Notable July inflation rates in services:

• Personal care and miscellaneous services: 14.77%
• Food and beverage serving services: 7.75%
• Restaurants and accommodation: 7.72%
• Transport: 4.43%
• Education: 3.64%

Which Categories Are Keeping Inflation in Check?

Despite the rise in food and services prices, several categories are providing an offset:

• Purchase of vehicles: -4.37%
• Information and communication: 0.63%
• Health: 1.34%
• Housing, water, electricity, gas and fuels: 2.16%
• Recreation, sport and culture: 1.64%

Lower readings in these categories are preventing the food-driven rise from translating into a sharper increase at the headline level.

Which States Recorded the Highest CPI Inflation in July 2026?

Southern and central states led the state-wise inflation chart in July:

• Telangana: 6.32%
• Andhra Pradesh: 5.72%
• Tamil Nadu: 5.44%
• Madhya Pradesh: 4.91%
• Karnataka: 4.89%

Madan Sabnavis of Bank of Baroda attributed the higher readings in southern states to stronger demand, higher logistics costs, and local levies.

How Does July CPI Data Affect the RBI’s Rate Decision?

The RBI kept its repo rate unchanged earlier this month. Governor Malhotra said headline inflation is expected to rise in the near term and peak in the third quarter of FY27, largely because of food and fuel prices, before moderating. He added that price pressures have not become broad-based, with core inflation excluding precious metals remaining contained.

The July reading does not change the RBI’s stance on its own, but it reduces the room for further easing if the upward trend continues. The central bank will focus on whether the rise proves temporary, driven mainly by specific food items, or spreads into core goods and services. Nayar expects CPI to harden to 4.7% in August and cross 5% in September.

Final Outlook

Source: Moneycontrol