India’s August PMI Boom Sparks Sharpest Price Hike in Over a Decade

In August 2025, India’s private-sector economy surged like never before. The composite PMI rocketed to 65.2, up from 61.1 in July—its highest level since the survey began in December 2005 and marking a 49th consecutive month of expansion.

Key Highlights:

New Orders jumped at the fastest pace in nearly 18 years, signaling immense underlying demand ().
Export demand surged to its highest since 2014.
Services PMI soared to 65.6, while the manufacturing PMI rose to 59.8, the strongest since January 2008.
Businesses responded with aggressive price hikes—the sharpest since 2013—passing on rising labor and material costs to consumers.
This buoyant activity also led to the fastest job creation since June, with firms increasingly optimistic, reaching the highest sentiment since March.

Market Implications:

Inflation Pressures on the Rise: The rapid increase in prices is likely to keep inflation elevated, prompting the RBI to maintain restrictive monetary policy for longer.
Stock Market Outlook: Strong demand and export growth bode well for services and manufacturing stocks, but rising input costs might squeeze margins—investors may favor sectors with pricing power.
Bond Market Response: With tougher inflation outlook, bond yields may rise, potentially keeping interest rates higher for an extended period.
Currency Impact: Greater global demand could support the rupee, but sustained inflation may cause volatility depending on RBI moves.

Summary Snapshot

Theme	Insight
Demand	Record-breaking surge across sectors
Pricing Power	Firms raising prices aggressively
Inflation	Elevated; RBI likely stays restrictive
Markets	Services & exporters advantaged; margin pressures elsewhere
Outlook	Continued strength, but inflation to watch

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or trading decisions.

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Our Recent FAQS

Frequently Asked Question &
Answers Here

Q1: What exactly is the PMI and why does it matter?

The Purchasing Managers’ Index (PMI) is a key indicator of economic health. A composite PMI above 50 signals expansion. In August, India’s PMI at 65.2 reflects an extraordinary pace of growth across manufacturing and services.

Q2: Why was August particularly exceptional?

There was a surge in new orders, especially exports, while both services and manufacturing hit multi-year highs. This created both strong growth and pricing power for firms ().

Q3: What does this mean for inflation?

Companies markedly raised prices—the most aggressive since 2013—driven by elevated input costs and strong demand. This intensifies inflationary concerns.

Q4: How will the RBI likely respond?

Given the sharp price hikes and buoyant demand, the RBI may remain cautious on rate cuts and may keep monetary policy tight to tame inflation.

Q5: Which sectors stand to benefit most?

• Services and exporters enjoying high demand and pricing power. • Manufacturing may see strong revenue but face margin pressures due to cost inflation

Q6: What could be the market reaction?

• Equities: Selective strength in sectors with pricing leverage. • Bonds: Higher yields and rate expectations could persist. • FX: Moderate rupee strength if export momentum continues, but inflation and policy hold could dampen gains.