Retail inflation breaches RBI’s upper tolerance band at 6.09% in October, first time in two years
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India’s retail inflation rose to 6.09% in October from 5.54% in September, breaching the Reserve Bank of India’s (RBI) upper tolerance limit of 6% for the first time in two years, driven by a sharp increase in food prices, according to provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Thursday.
The year-on-year inflation rate, measured by the Consumer Price Index (CPI) with base year 2024, stood at 6.09% in October 2026 compared with October 2025. The corresponding inflation rates in rural and urban areas were 6.63% and 5.41%, respectively, highlighting the higher price pressures in rural India.
Food inflation climbs to 8.94%
Food inflation, measured by the Consumer Food Price Index (CFPI), accelerated to 8.94% in October on a year-on-year basis. Rural food inflation stood at 9.09% while urban food inflation was recorded at 8.68%.
The sharp rise in food prices was the primary driver of the increase in headline retail inflation during the month.
Onion prices surged 116.22% year-on-year in October, accelerating from an already elevated 108.13% in September. Garlic inflation rose to 60.74% from 54.62% during the same period. Ginger prices, however, saw some moderation, with inflation easing to 48.32% in October from 62.85% in September.
However, the price rise was not broad-based across all vegetables. Potato prices fell 14.24% year-on-year in October while cauliflower prices declined 10.57%. Brinjal and cabbage also recorded a year-on-year fall.
The broader food and beverages category recorded inflation of 8.51% in October, underscoring the persistent pressure from food prices.
Rate hike likely
The rise in inflation comes after the central bank raised its benchmark repo rate last month for the first time in nearly four years, joining several global central banks in tightening monetary policy. The RBI cited elevated inflation expectations and a broadening of price pressures as key concerns.
RBI Governor Sanjay Malhotra has flagged risks to agriculture and rural demand from a weak monsoon and strong El Niño conditions. However, he said ample foodgrain stocks and government interventions are expected to cushion the impact.
On the global front, Brent crude futures have eased to around $92 a barrel, offering some relief to the inflation outlook. Markets are weighing hopes of a de-escalation in the US-Iran conflict against concerns over attacks on shipping in the Strait of Hormuz.
Radhika Rao, Senior Economist and Executive Director, DBS Bank, said, "India's headline inflation tested the upper end of the RBI's tolerance band in Oct to a two-year high, with a sharp food-driven upmove accompanied by signs of broadening out of price pressures on a sequential basis. With headline inflation yet to peak, compounded by an unfavourable base effect, the central bank's quarterly projection is likely to be revised higher. The data reinforces our expectation of a second successive rate hike in December."
MoSPI said real-time price data were collected from 1,407 urban markets, including online markets, and 1,465 villages across all states and Union Territories. The ministry reported a 100% response rate in both rural and urban markets during October 2026.