India's October retail inflation quickens to 6.09% to breach RBI's tolerance ceiling

India's retail inflation accelerated to 6.09% in October, compared with 5.54% in September, as a broad-based increase in food prices pushed up household costs, according to data released by the Ministry of Statistics and Programme Implementation on Thursday.

This marks the 12th straight month of consumer prices quickening in the country. India updated its retail inflation base year from 2012 to 2024 on February 12, 2026, modernising the basket of goods used to track price changes

The October reading shows inflation has now breached the Reserve Bank of India's target range of 2-6%. Nearly half of the economists surveyed by Reuters expected inflation to reach or exceed the 6% threshold.

Food inflation accelerated to 8.94% in October from 7.74% in September, reflecting a broad-based rise in prices of essential food items. The increase adds to household cost pressures and reinforces concerns over the persistence of food-led inflation, particularly after an uneven and deficient monsoon affected supplies of key staples. Food prices, which account for nearly 40% of India's consumer price index, remain the biggest driver of the upward pressure on retail inflation.

Onion prices have nearly doubled since the beginning of the year, while relatively less volatile protein-rich foods such as meat, milk and eggs have also become more expensive. Higher global food prices have added to domestic pressures, particularly through increased costs of imported edible oils and other commodities.

Food inflation stood at 7.74% in September and was expected to accelerate to 8.20% in October, according to a Reuters poll of economists conducted between November 2 and 6. The survey had projected headline retail inflation at 5.93%, with estimates ranging from 5.50% to 6.60%.

"We are seeing clear signs of broadening inflationary pressures, with higher energy and raw material costs passing through to core inflation. In addition, food price inflation is picking up, with further upside risks stemming from the impact of weak reservoir levels on the rabi crop. Headline inflation is likely to stay above the RBI’s 6% upper tolerance limit over the next few months. Against this backdrop, we expect another 25 bps rate hike, although the recent sharp correction in crude and INR appreciation provides some breathing room to the RBI," said Vikram Chhabra, Senior Economist, 360 ONE Asset.

Economists had also flagged the possibility of double-digit inflation in several food categories, including meat, fish, oils and fats, fruits, vegetables and sugar.

Retail inflation has remained above the RBI's medium-term target of 4% for four consecutive months. Price pressures are expected to persist in the coming months, with global oil prices still around 40% higher than their levels before the US-Iran war.

The central bank expects inflation to average 5.2% in the current financial year, up from its earlier projection of 5%. This is also higher than the 5.1% median estimate in a Reuters poll conducted last month.

The RBI began its rate-hike cycle in October and is widely expected to raise the repo rate by another 25 basis points to 5.75% at its December policy meeting, according to the previous Reuters poll.

At the national level, inflation in the food and beverages category stood at 8.51%. Personal care, social protection and miscellaneous goods and services recorded inflation of 10.14%, while restaurants and accommodation services saw a rise of 10.06%.

Among individual food items, onion prices recorded inflation of 116.22% in October, compared with 108.13% in September. Garlic inflation rose to 60.74% from 54.62% during the same period.

Rural inflation increased to 6.63% in October from 6.08% in September, while urban inflation rose to 5.41% from 4.88%.