Key points
- Retail inflation rose to 6.09% in October from 5.54% in September, a two-year high above the RBI's 6% upper limit.
- Food inflation reached 8.94%, with onions up 116% on a year ago and garlic up 61%.
- Economists expect the RBI to raise the repo rate again in December, and see inflation staying near 6% for two more months.
India’s retail inflation rose to 6.09% in October, the highest in two years and the first reading above the Reserve Bank of India’s 6% upper tolerance limit since late 2024. Figures released by the Ministry of Statistics and Programme Implementation on Thursday, November 12, show prices rising faster than the 5.54% recorded in September, driven by food.
The October figure is also the highest since the new consumer price series, with 2024 as its base year, began in January, when inflation was 2.74%. It has risen every month since, and the RBI’s target is 4%, with a tolerance band of 2% on either side.
Food does the damage
The Consumer Food Price Index rose 8.94% from a year earlier, up from 7.74% in September. Onion prices were 116.22% higher than a year ago, against 108.13% in September. Garlic rose 60.74%, ginger 48.32% and lemon 47.30%. Four of the five items with the steepest rises were food items.
Some prices fell. Potatoes were 14.24% cheaper than a year ago, and cauliflower, coconut, brinjal and cabbage also declined. Silver jewellery, which had been the second-biggest driver in September at 87.82%, eased to 52.39%.
The rise was widespread. Food and beverages as a group rose 8.51%. Personal care, social protection and miscellaneous goods and services rose 10.14%, restaurants and accommodation about 10%, and transport 5.84%. Health (2.05%) and housing and utilities (2.90%) rose the least. Madan Sabnavis, chief economist at Bank of Baroda, said 11 of the 12 broad groups showed higher inflation than in September.
| Item | Value |
|---|---|
| Jan | 2.74% |
| Feb | 3.21% |
| Mar | 3.40% |
| Apr | 3.48% |
| May | 3.93% |
| Jun | 4.38% |
| Jul | 4.45% |
| Aug | 4.83% |
| Sep | 5.54% |
| Oct | 6.09% |
Villages pay more
Rural inflation was 6.63%, against 5.41% in cities. In September the figures were 6.08% and 4.88%. Rural food inflation stood at 9.09% and urban food inflation at 8.68%. Among states, rural inflation was 7.81% in Andhra Pradesh, 7.54% in Karnataka, 7.20% in Uttar Pradesh, 7.01% in Kerala and 6.86% in Maharashtra, while Delhi’s was 5.24%. The gap between rural and urban inflation widened to 1.22 percentage points from 1.20 in September. Prices were collected from 1,407 urban markets and 1,465 villages, with a full response in both.
How we got here
Inflation was 4.83% in August, and our report on the September figures described the eighth monthly rise in a row as onions more than doubled. On October 7 the RBI’s Monetary Policy Committee voted unanimously to raise the repo rate by 25 basis points to 5.50%. It projected inflation at 6% for October to December and raised its forecast for 2026-27 to 5.2%.
October has now matched that projection. A weak and uneven monsoon has kept vegetable supplies tight, as we reported earlier, and crude oil prices have stayed high.
What economists say
Economists read the data as a sign of more tightening. Radhika Rao, senior economist and executive director at DBS Bank, said: “The data reinforces our expectation of a second successive rate hike in December.” She expects the RBI to revise its inflation projection upward, since headline inflation has not yet peaked and the base effect is unfavourable.
Sabnavis said: “We do expect the RBI to consider either 25 or 50 bps hike in December.” Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, said: “We expect the next few readings to remain elevated above 6%.” She sees a further 50 basis points of tightening in 2026-27, with more upside risk if food inflation flares or oil prices reverse.
Aditi Nayar, chief economist at ICRA, expects headline inflation of about 6.1% in November, helped by an unfavourable base from last year’s GST rationalisation, and an average of about 6.2% for October to December. “Core inflation is expected to inch up further in November 2026,” she said, and she sees risks tilted to the upside because of the deficient and uneven monsoon.
Tanay Dalal, senior vice president at Axis Bank, said the numbers “increase the risk that policy rates may need to rise above the estimated neutral rate of 6 per cent.” Anil Gupta, president of the industry body PHDCCI, said the food component “warrants particular attention given its significance in the consumption basket.”
Why it matters to households
Food prices are rising faster than prices overall, and faster in villages than in cities, so the kitchen budget feels the squeeze more than the headline number suggests. A higher repo rate also raises the cost of floating-rate home, car and business loans, though it lifts returns on new fixed deposits.
What comes next
The RBI’s Monetary Policy Committee meets in December and will decide whether to raise the repo rate from 5.50%. Inflation now sits 2.09 percentage points above the RBI’s 4% target. The next monthly reading, for November, is due on December 14, 2026, and economists expect it to stay close to 6%.
The documents
- Press release of Consumer Price Index on base 2024=100 for September 2026MoSPI / PIB, October 12, 2026