India's retail inflation rose to 6.09 per cent in October, the highest reading of 2026 and above the 6 per cent upper limit of the Reserve Bank of India's tolerance band. The statistics ministry released the figure on Thursday. Inflation was 5.54 per cent in September and 2.74 per cent in January.
Prices rose 0.51 per cent from September to October. That is slower than the 0.69 per cent rise a month earlier, and monthly increases have eased for four straight months, from 0.89 per cent in July. The annual rate still climbed because prices were almost flat between September and October last year, which gives a low base for comparison. The index now uses 2024 as its base year.
What pushed it up
Food and beverages, which carry 36.75 per cent of the index, saw inflation rise to 8.51 per cent from 7.36 per cent in September. Inflation rose in 11 of the 12 divisions of the index. Rural inflation was 6.63 per cent and urban inflation 5.41 per cent, and the gap between them widened slightly to 1.22 percentage points. Rural inflation has been higher than urban since February. Dairy prices are also moving: Amul raised fresh milk prices from 12 November.
What economists expect
Aditi Nayar, chief economist at ICRA, expects food inflation to stay above 8 per cent in November, citing milk, sugar and onion prices, and expects headline inflation to remain above 6 per cent for the next couple of months. She flagged a deficient monsoon and weak reservoir replenishment as risks to the rabi crop and food prices.
Nayar said a further quarter-point rise in the repo rate at the Monetary Policy Committee meeting on 2 to 4 December looks almost certain. She expects economic growth above 7 per cent in the July-September quarter. How crude oil prices behave, after cooling recently, will decide whether more tightening is needed in 2027, she said.
India's inflation target is 4 per cent with a tolerance band of 2 to 6 per cent. A single month above 6 per cent is not a formal failure of the target. That happens only if average inflation stays outside the band for three consecutive quarters. The repo rate is the rate at which the RBI lends to banks; raising it makes borrowing dearer and is meant to slow price rises.
