Indian inflation rises to 6.09% in October, breaching central bank’s upper band
Key Facts
India’s annual retail inflation rose to 6.09% in October 2026, exceeding the central bank’s upper band of 6%, according to provisional data released by the Ministry of Statistics and Programme Implementation. The index is measured using 2024 as its base year. The reading followed inflation of 5.54% in September, a final figure. A Reuters poll had forecast a slower rise, to 5.93% in October. The breach puts the price trajectory at the center of monetary policy debate, after the central bank raised the repo rate in October. Investors are watching for the Monetary Policy Committee’s next meeting in December, with food pressures remaining a key focus in the latest reading.
Food was the main driver of the acceleration, with food inflation rising to 8.94% in October from 7.74% in September, the ministry said. Food inflation was 9.09% in rural areas, compared with 8.68% in cities in October. Reuters said prices of onions, garlic and ginger contributed to the increase in food prices, which account for about 40% of India’s consumer price index. Official item-level data show onion inflation at 116.22% year on year, up from 108.13% in September. Garlic inflation also rose to 60.74% from 54.62% in the previous month, underscoring the continued sharp increase in the prices of both items in the food basket.
October’s reading followed the Monetary Policy Committee’s decision that month to raise the repo rate by 25 basis points to 5.50%. The central bank shifted its policy stance to gradual tightening, according to the committee’s decision. In its October projections, the bank put inflation for fiscal year 2026–2027 at 5.2%, with forecasts of 6.0% for the third quarter and 5.7% for the fourth quarter. It estimated real gross domestic product growth for the same fiscal year at 7.1%, with quarterly growth forecast at 7.2% in the second quarter, 6.9% in the third and 6.8% in the fourth. These projections place inflation and growth together in the backdrop to the bank’s upcoming decisions, without changing the elevated actual reading in October.
The central bank said future interest rate decisions would depend on developments in inflation and growth, as well as the path of core inflation, the breadth of price pressures and the second-round effects of the supply shock. In its assessment of supply risks, it said weak southwest monsoon rains and a strong El Niño could weigh on the outlook for agriculture and rural demand. It added that food-grain stocks and proactive government measures were expected to limit the impact. The bank described the options ahead as “a rate hike or a pause,” depending on how conditions and the economic outlook develop. This means October’s reading will inform the committee’s assessment alongside upcoming data on inflation and activity, while its decision remains tied to developments as they unfold.
The data strengthened market expectations of further interest rate increases, Reuters reported. The agency quoted Radhika Rao, an economist at DBS Bank, as saying the data “reinforce our expectation of a second consecutive hike in December.” Reuters reported that the last previous breach of the 6% level was recorded in October 2024, when inflation reached 6.2% under the older consumer price index series, which used 2012 as its base year. That comparison differs from the current October reading, which was released using 2024 as its base year. The Monetary Policy Committee is scheduled to meet from 2 to 4 December 2026, while November inflation data will be released on 14 December, or on the next working day if the date falls on a holiday.
October’s official data were based on price collection from 1,407 urban markets and 1,465 villages. The ministry said the response rate was 100% in rural and urban markets during the month. This coverage forms the basis of the consumer price index reading published for October. The ministry classified the annual inflation reading of 6.09% as provisional, while September’s final reading was 5.54%. The next November reading is due on the announced date, providing the committee and investors with a more recent indicator ahead of the monetary policy meeting.