India's retail inflation rose to 5.54% in September 2026, up from 4.83% in August, according to provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI) on 12 October. Retail inflation is measured by the Consumer Price Index (CPI), which tracks the prices households pay for a fixed basket of goods and services. The current series uses 2024 as its base year.
Food prices drove the increase
Food inflation, measured by the Consumer Food Price Index, rose to 7.74% in September from 5.97% in August. Among individual items, MoSPI listed the highest year-on-year increases as:
- Onion: 108.09%
- Silver jewellery: 87.80%
- Ginger: 62.85%
- Garlic: 54.62%
- Lemon: 36.41%
Some items became cheaper than a year ago, including potato (down 11.50%) and tomato (down 8.62%).
Economists quoted in news reports pointed to seasonal price rises, weak rainfall and a low base, as food prices had fallen in September 2025. A "low base" means that when last year's prices were unusually low, this year's percentage increase looks larger.
Villages saw higher inflation than cities
Rural inflation was 6.08% in September, compared with 4.88% in urban areas. Food inflation was 8.06% in rural India and 7.18% in cities.
Beyond food, the category of restaurants and accommodation services showed 9.36% inflation, while personal care and miscellaneous goods, which includes jewellery, stood at 13.75%. Transport inflation was 5.01%. The health category recorded 1.40%.
Where this sits against RBI's target
The government has set the Reserve Bank of India (RBI) a target of 4% CPI inflation, with a tolerance band of 2% to 6%. September's reading is inside that band but above the 4% mid-point.
The data came a week after the RBI's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50% on 7 October, its first hike in nearly four years according to PTI. The repo rate is the rate at which the RBI lends to banks, and changes to it feed into loan and deposit rates. In that policy, the RBI raised its CPI forecast for 2026-27 to 5.2% from 5%, as reported by PTI.
What it means for household budgets
Inflation at 5.54% means that, on average, the basket of goods tracked by the CPI cost 5.54% more than in September 2025. Households feel this most in items they buy often, such as vegetables and meals outside the home. It also affects the real return on savings: interest earned on a deposit is worth less in purchasing power when prices rise faster.
MoSPI is scheduled to release October's CPI data on 12 November 2026.