India's inflation accelerated in August, pushing closer to the top of the central bank's 2%-6% target range and potentially narrowing the scope for policymakers to remain on hold. The consumer price index rose 4.82% last month from a year earlier, up from 4.45% in July, data released Monday by the Ministry of Statistics and Programme Implementation showed. That was slightly below the 4.86% median estimate in a Bloomberg survey of economists. The reading was the highest since late-2024 and marked the third straight month that headline inflation exceeded the Reserve Bank of India's 4% medium term target.

The data showed that "price pressures have become more persistent rather than a one-month aberration, making the RBI's policy trade-off difficult," said Manoranjan Sharma, economist with Infomerics Ratings. Still, the RBI has signaled it won't react mechanically to a higher number. Governor Sanjay Malhotra said in an interview Friday that underlying price pressures remain low and policymakers will focus on whether the increase persists and spreads more broadly through the economy.

The RBI has kept its benchmark rate unchanged at 5.25% since the start of the year. The monetary policy committee next meets in October, with some economists seeing a real risk of the first rate hike since the Middle East war began. The RBI's prolonged pause situation "has changed drastically," Soumya Kanti Ghosh, an economist at the State Bank of India, wrote in a note Friday, predicting inflation may head toward 6.5% or higher if oil prices remain high.