Retail inflation hits 5.54% in September as food prices jump

Retail inflation climbed to 5.54% in September, the highest reading since the new series began, as food prices surged. The overall consumer price index rose from 4.83% in August to 5.54% in September. Food inflation, measured by the Consumer Food Price Index, jumped to 7.74% in September from 5.97% a month earlier. The food and beverages segment, which carries the heaviest weight in the index, posted a 7.36% rise, outpacing other categories. Paan, tobacco and intoxicants rose 4.8%, while clothing and footwear increased 3.93%. Housing, water, electricity, gas and other fuels grew 2.74%, and furnishing and household equipment climbed 3.11%. These figures show price pressure spreading beyond food. September’s 5.54% reading tops the new index series that started in January, where the rate fell from 6.21% in October 2024 to 3.49% in February 2025. In response to the rising trend, the Reserve Bank of India lifted its policy repo rate by 25 basis points to 5.50% last week. Analysts say further tightening may be needed if inflation stays above the 4% target.

Context

Retail inflation measures price changes faced by households and guides the RBI’s monetary policy. A rise above 5% often leads the central bank to raise rates to keep inflation near its 4% goal.