Retail inflation crosses RBI ceiling as food and non-food prices climb

India's retail inflation reached a two-year high of 6.09 percent in October, going past the Reserve Bank of India's upper limit of 6 percent. Headline inflation has gone up every month since November 2025 and crossed the RBI's target of 4 percent in June. The National Statistics Office released the data showing that the Consumer Price Index rose 6.1 percent in October, matching predictions from a Bloomberg poll of economists.

Broad-Based Price Rises

Monthly price increases hit 11 of the 12 major categories in the Consumer Price Index basket. The sole exception was personal care, social protection and miscellaneous goods, though that category still recorded the highest inflation in the basket. Food and beverages, which make up 37 percent of the basket, saw inflation climb to 8.51 percent in October from 7.36 percent in September. Among food groups, sugar, confectionery and desserts recorded the highest inflation at 13 percent. Core inflation stood at 4.6 percent, while transport inflation reached 5.8 percent.

Rate Hike Outlook

Economists now expect the central bank to raise interest rates by 25 basis points at its December meeting. Rajani Sinha, chief economist at CareEdge Ratings, noted that broadening price pressures make a December rate hike likely. Aastha Gudwani, chief economist at Barclays India, expects a 25-basis-point hike in December followed by another 25-basis-point hike in February 2027 to bring the repo rate to 6 percent.

Context

Central banks use interest rate hikes to cool down rising prices when inflation stays above their target limits. The Reserve Bank of India monitors consumer price data closely to decide borrowing costs for the wider economy.