Mumbai, India, September 15, 2026 (ANI):
Underlying inflation pressures in India may be stronger than indicated by year-over-year numbers, with the recent monthly trend in core inflation pointing to faster price increases, according to a report by ICICI Bank Research.
Core inflation, excluding gold and silver, rose 0.46 percent month over month in August, broadly in line with the average monthly increase of 0.42 percent recorded over the previous five months.
The report said that if the recent monthly trend is annualized, underlying core inflation would be “much higher than what the YoY number shows.”
On a year-over-year basis, core inflation rose to a 15-month high of 4.2 percent in August from 3.9 percent in July, largely due to higher gold and silver jewelry prices. Excluding gold and silver, core inflation stood at 2.9 percent, up from 2.7 percent in July.
The report said higher commodity prices are increasingly feeding into the prices of goods and services, with the impact visible across several components of core inflation.
Information and communication prices recorded the sharpest sequential increase, rising 1.4 percent month over month. This was driven by a 2.1 percent increase in mobile tariffs, along with higher prices for mobile handsets and laptops.
Transport prices, excluding fuels, rose 1.5 percent month over month in August, compared with 0.4 percent in July. Prices of automobiles, bicycles, tires and other transport equipment increased, along with transport fares. Restaurant prices also rose 0.8 percent during the month.
“Hence, there is a mix of cost-push and demand-pull inflation seen in different items,” the report said.
The broader inflation trend also showed rising price pressures. Retail inflation increased to a 20-month high of 4.82 percent in August from 4.44 percent in July, while food inflation rose to 6 percent and energy inflation to 5.2 percent.
According to the report, the share of Consumer Price Index (CPI) items recording inflation above 4 percent has increased to around 37 percent from 16 percent in January.
Within food and beverages, around 49 percent of items are now recording inflation above 4 percent, compared with 31 percent in January.
ICICI Bank Research expects higher global energy and commodity prices, along with deficient rainfall, to keep inflationary pressures elevated in the second half of the financial year.
It expects headline inflation to average around 5 percent in FY27, while core inflation excluding gold and silver is expected to move closer to the 4 percent target from December onward.
On monetary policy, ICICI Bank Research said the Monetary Policy Committee (MPC) could raise the repo rate as early as October, citing the revised growth and inflation outlook and abundant liquidity.
The report expects a total rate hike of 50-75 basis points in the current cycle, with the extent of tightening likely to depend on the movement in energy prices. (ANI)
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