August inflation rises to 3%

September 01, 2025 (MLN): Consumer Price Index (CPI) inflation decelerated to 3% YoY in August 2025, down from 4.1% recorded in the previous month, according to official data released today.

The latest figures represented a notable improvement from the 9.6% inflation rate witnessed in August 2024. 

The month-on-month CPI inflation showed a decline of 0.6% in August, a sharp contrast to the 2.9% increase recorded in July 2025.

Accordingly, the average yearly inflation for 2MFY26 is 3.53%. 

Urban-Rural Divide Persists

The inflation data revealed notable differences between urban and rural areas. Urban CPI inflation stood at 3.4% YoY in August, down from 4.4% in the previous month and substantially lower than the 11.7% recorded in August 2024.

Urban areas experienced a month-on-month decrease of 0.7%, compared to a 3.4% increase in July.

Rural inflation showed even more encouraging trends, rising by just 2.4% year-on-year in August, down from 3.5% in July and significantly lower than the 6.7% recorded in August 2024.

On a monthly basis, rural areas saw a 0.5% decrease in August, compared to a 2.2% increase in the previous month.

The Sensitive Price Indicator (SPI), which tracks essential commodities, painted a different picture.

SPI inflation increased by 2.6% year-on-year in August 2025, a notable shift from the 0.9% decrease recorded in July. Month-on-month, the SPI rose by 3.2%, maintaining momentum from the 3.1% increase seen in July.

Meanwhile, the Wholesale Price Index (WPI) continued its deflationary trend, declining by 1%YoY in August, compared to a 0.5% decrease in July.

This represents a stark contrast to the 6.3% increase recorded in August 2024. On a monthly basis, the WPI fell by 0.2% in August.

The overall moderation in inflation came as welcome news for policymakers and consumers alike, suggesting that previous monetary tightening measures and economic reforms may be yielding results.

However, the uptick in SPI inflation, which affects essential items consumed by lower-income households, suggests that inflationary pressures remain uneven across different segments of the economy.

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