Retail inflation in India surged to 6.09 per cent in October, breaching the Reserve Bank of India’s upper tolerance limit of 6 per cent for the first time in two years.
The rise, driven primarily by elevated food prices, marks the highest reading since the new Consumer Price Index (CPI) series with base year 2024 was introduced, according to data released by the Ministry of Statistics and Programme Implementation on Thursday.
The October figure represents a 55-basis-point increase from the 5.54 per cent recorded in September. The central bank’s inflation-targeting framework mandates maintaining CPI inflation at 4 per cent, with a tolerance band of 2 per cent on either side.
The acceleration was primarily fueled by the Consumer Food Price Index, which rose to 8.94 per cent in October from 7.74 per cent in September. Food and beverages as a category reached 8.51 per cent inflation at the national level.
Among individual food items, onion prices recorded the highest inflation at 116.22 per cent in October, up from 108.13 per cent in September. Other items also saw significant price hikes:
- Garlic: 60.74 per cent
- Ginger: 48.32 per cent
- Lemon: 47.30 per cent
- Silver jewellery: 52.39 per cent
Conversely, some items recorded deflation, including potato prices at 14.24 per cent, cauliflower at 10.57 per cent, coconut at 5.60 per cent, brinjal at 3.34 per cent, and cabbage at 1.92 per cent. Transport inflation rose to 5.84 per cent in October, up from 5.01 per cent in September.
Price pressures remained higher in rural areas than in urban centers during October. Rural inflation rose to 6.63 per cent from 6.08 per cent in September, while urban inflation increased to 5.41 per cent from 4.88 per cent. In Delhi, inflation stood at 5.24 per cent in rural areas and 3.77 per cent in urban areas.
Personal care, social protection and miscellaneous goods and services recorded inflation of 10.14 per cent, while restaurants and accommodation services saw a rise of 10.06 per cent. In rural areas, the latter category reached 10.24 per cent, compared to 9.90 per cent in urban areas.
Garima Kapoor, an economist at Elara Capital, said that inflationary pressure is not expected to ease soon, estimating the central bank could increase interest rates by 50 basis points over the next six to nine months; this data arrives before the Reserve Bank of India’s Monetary Policy Committee is scheduled to meet from December 2–4.
With the current fiscal year’s inflation estimate revised to 5.2 per cent, the central bank faces the challenge of balancing price stability with economic growth. While concerns remain regarding potential attacks on ships in the Strait of Hormuz, officials have said that sufficient grain stocks are available to help mitigate some of the supply-side impact.