Solution: Let the price of sugar initially be Rs x per kg.
According to Question,
25% increase in the price of sugar = cost of 1 kg of sugar 32
25% of x+x=32
⇒x+(x×25/100) =32
⇒x+(x/4)=32
⇒{(4x+x)/4}=32
⇒(5x/4)=32
⇒5x=32×4
⇒x=128/5
Therefore, x=25.6 Rs.
So initially the price of sugar per kg was Rs.25.6