India’s retail inflation hits 23-month high of 5.54% in September as food inflation surges to 7.74%

India’s retail inflation rises to 5.54% in September as food inflation hits 7.74%

India’s retail inflation rose to 5.54% in September 2026 from 4.82% in August, driven by elevated food prices, according to provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday.

Food inflation

Food inflation, measured by the Consumer Food Price Index (CFPI), climbed to 7.74% in September. Rural food inflation stood at 8.06%, while urban food inflation was lower at 7.18%, the data showed.

Overall retail inflation, measured by the Consumer Price Index (CPI), was higher in rural areas at 6.08%, compared with 4.88% in urban areas.

Onions recorded the sharpest price rise among major items, with inflation surging to 108.09% in September from 48.78% in August. Garlic inflation accelerated to 54.62% from 43.60% while lemon prices rose 36.41%, compared with 15.15% in the previous month. However, some vegetables continued to provide relief, with potato prices declining 11.50% year-on-year and tomato prices falling 8.62%.

Silver jewellery inflation also remained exceptionally elevated.

The September inflation reading is based on the revised CPI series, with 2024 as the base year.

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said, "The headline CPI inflation came in line with expectations. We continue to see the inflation trajectory trending higher above 6% through next few months as adverse base effects and food price shocks play out. RBI’s revised inflation estimates remain realistic. We expect additional 50 bps of repo rate hike, with upside risks likely if geopolitical risks do not subside."

Last week, the Reserve Bank of India (RBI) raised the benchmark repo rate by 25 basis points to 5.50% amid inflationary concerns. RBI Governor Sanjay Malhotra had said headline CPI inflation rose to 4.5% in August from 4% in July, largely driven by higher food and fuel prices.

Garima Kapoor, deputy head of research and economist at Elara Capital, said inflation was in line with expectations, as higher food and energy prices continued to feed into broader price pressures.

“Amid continued stickiness in commodity prices and rising global yields, we expect the RBI to continue to remain firmly on a path of rate hikes. We see another 2 hikes from the RBI this financial year,” Kapoor said.

Headline CPI at 23-month high

Akhil Mittal, Senior Fund Manager - Fixed Income, Tata Asset Management, said "India's headline CPI came at 23-month high at 5.54% for the month of September 2026, largely in line with expectations of 5.58%. August CPI was revised from 4.82% to 4.83%. Food inflation came in at 7.74%, slightly lower than expectation for 7.9%. Housing inflation came in at 2.74%, Restaurant and Accommodation at 9.36% is largely portraying higher demand and some generalisation of food inflation. Personal care inflation came in at 13.75%, largely depicting higher gold prices."

While the numbers are in line with RBI projections, higher crude prices through the month of September and early October could likely have further negative impact on inflation and could add to generalisation of inflation. Also, El Nino impact is yet to be seen in food inflation, he said, while adding, "While RBI has increased FY27 inflation to 5.2%, we believe that if crude remains elevated, we might see even higher inflation and hence have a negative impact of inflation. We think FY27 inflation could be in 5.30%-5.40% and further continue inching up in Q1FY28. This reiterates our view of total 75-100 bps rate hike cycle (50-75 bps more to go)."

India’s year-on-year retail inflation increased to 5.54% (Provisional) in September 2026, compared with 4.83% in August 2026. Food inflation registered a sharper increase, rising to 7.74% in September from 5.97% in August, as measured by the Consumer Food Price Index (CFPI). The latest figures indicate an acceleration in consumer price pressures, particularly in food, with implications for household purchasing power and consumption expenditure said Anil Gupta, President, PHDCCI.