Retail inflation breaches RBI’s 6% upper limit at 2-yr high of 6.09% in Oct | Economy & Policy News

India’s retail inflation, as measured by the Consumer Price Index (CPI), rose to a two-year high of 6.09 per cent in October, breaching the Reserve Bank of India’s (RBI’s) upper tolerance limit of 6 per cent.

 

According to data released by the National Statistics Office (NSO) on Thursday, a sharp rise in food prices, along with a broad-based increase across 11 of the 12 major divisions, pushed inflation up from 5.54 per cent in September.

 

Retail inflation has now risen for 12 straight months since bottoming out at 0.04 per cent in October 2025. Based on back-series data, the October reading was the highest since October 2024, when inflation stood at 6.21 per cent.

  

Sequentially, the index rose 0.51 per cent to 110.05 in October from 109.49 in September. An unfavourable base also added to the pressure.

 

The print comes weeks after the RBI’s Monetary Policy Committee (MPC) unanimously raised the repo rate by 25 basis points to 5.5 per cent.

 

Economists had pencilled in another rate hike at the MPC’s December 2-4 meeting even before Thursday’s data.

 

“We do expect the RBI to consider either a 25 or 50 bps hike in December, given that inflation in November and December would also be around the level of 6 per cent based on the trajectory of food prices. Core inflation too will rise as companies in the FMCG space have started raising prices,” said Madan Sabnavis, chief economist at Bank of Baroda.

 

Food inflation, measured by the Consumer Food Price Index (CFPI), rose to 8.94 per cent in October from 7.74 per cent in September. This was higher than the 9.04 per cent recorded in November 2024 under the old 2012 series.

 

“The ongoing harvest prospects will throw more light on how food prices behave. Area under cultivation was lower for rice, maize, oilseeds, cotton and sugarcane. It has also been reported that pulses production, especially tur, could be lower this time, which can lead to a spike in prices,” reckoned Sabnavis.

 

Onion prices continued to drive the increase, with inflation rising to 116.22 per cent from 108.13 per cent in September. Inflation in garlic accelerated to 60.74 per cent from 54.62 per cent, and in lemon to 47.30 per cent from 36.41 per cent. Ginger inflation eased to 48.32 per cent from 62.85 per cent.

 

At the other end, potato deflation deepened to 14.24 per cent from 11.52 per cent, and cauliflower prices fell 10.57 per cent against 2.88 per cent in September. Brinjal and cabbage slipped into deflation, at 3.34 per cent and 1.92 per cent, respectively.

 

Inflation rose in 11 of the 12 divisions — barring personal care and social protection — of the CPI basket in October compared with September. Restaurants and accommodation services crossed double digits at 10.06 per cent, from 9.36 per cent, while transport inflation rose to 5.84 per cent from 5.01 per cent amid higher fuel costs.

 

Rural inflation rose to 6.63 per cent from 6.08 per cent, while urban inflation increased to 5.41 per cent from 4.88 per cent.

 

Among states with a population of more than 5 million, Tamil Nadu recorded the highest headline inflation at 7.29 per cent. It was followed by Telangana (7.26 per cent), Andhra Pradesh (7.25 per cent), Madhya Pradesh (7.19 per cent) and Odisha (7.17 per cent).