India’s Retail Inflation Rises to 5.54% in September 2026 as Food Prices Surge

Inflation in India increased to 5.54% in September 2026 compared to 4.83% in the month of August due to inflation in the prices of food items such as vegetables. This is the highest inflation rate since October 2024 according to the figures given in the September report. Inflation in the price of food items increased to 7.74%, while rural inflation increased to 6.08% and urban inflation was recorded at 4.88%.

Revised Inflation Rates of CPI for September 2026

The revised numbers for the month of September were released on October 12, 2026, by the Ministry of Statistics and Programme Implementation (MoSPI).

These data are published as per the revised Consumer Price Index (CPI) series, where the base year is 2024.

Food Inflation Jumps to 7.74%; Price of Onions Tops the List

Inflation in food products moved up from 5.97% in August to 7.74% in September. Among the mentioned products, prices of onions experienced the highest rate of inflation, while garlic and ginger came second and third.

Since the two categories of tomatoes and potatoes had negative inflation rates, it means that their prices were still lower than those of the previous year.

However, their decreases in year-on-year terms narrowed. Onion inflation, on the other hand, jumped to above 100%, which meant that the price of onions doubled the price of the same commodity last year.

In addition, there were other categories that faced rising prices. These include restaurants and hotels with an inflation rate of 9.36%, freight services at 14.73%, and personal care, social protection and miscellaneous goods and services at

13.75%. Inflation in silver jewelry eased to 87.80%.

Why Is Retail Inflation Rising?

September’s inflation numbers were driven by a combination of the following factors: food price pressure, energy prices, and the uncertainty surrounding the same due to weather effects.

Food supply pressure: Food inflation was driven by the rise in prices of onions, garlic, and other vegetables, as well as worries regarding the deficient southwest monsoon and the El Niño phenomenon.

Increasing crude oil prices: Increasing global crude oil prices might affect fuel prices, as well as costs of transport and production. Such costs could eventually be reflected in the prices of products and services.

Imported inflation: As a result of a weakened rupee, the cost of importing items denominated in foreign currency is higher. It is especially applicable to crude oil, as India depends heavily on imports to satisfy oil demand.

Moreover, September’s inflation figures came out above the 5.40% median estimate of the 41 economists polled by Reuters.

RBI Raises FY27 Inflation Projections to 5.2%

The RBI raised the inflation projection for the year in its monetary policy review conducted on October 7, 2026. The inflation projection for FY 2026-27 was increased from 5.0% to 5.2% due to rising crude oil prices and food prices, along with risks associated with weather.

This was the first time in almost four years that the RBI had raised the repo rate. This indicates that the MPC (Monetary Policy Committee) changed its view from neutral to calibrated tightening, indicating a focus on inflation risks.

Inflation Projections for Quarter Ending June 2027

It appears that RBI believes in an upside trend in inflation followed by moderation in the future. Higher interest rates can control demand and inflationary expectations; however, monetary policy cannot deal with supply shortages resulting from weather conditions and oil prices.

RBI’s Inflation Target: 4% in the Range of 2-6%

In India’s flexible inflation targeting regime, the RBI intends to keep the inflation rate at 4%, with a tolerance range of 2–6%.

In September, the inflation rate stood at 5.54%, which is above the central bank’s inflation target of 4%. However, it was within the RBI’s 2-6% tolerance range. This is because being above the target rate does not necessarily imply breaching the permissible range.

MPC has six members, of which three members belong to the RBI, and three members are appointed by the Central Government.