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Retail Inflation Surged to 6.09% in October. Repo Rate Hike Not Ruled Out Next Month

hellohimachalse@gmail.com 12 Nov 2026 30 min ago

Retail inflation surged to 6.09 per cent in October, breaching the Reserve Bank’s upper tolerance limit for the first time in two years and prompting economists to anticipate a policy rate hike by the RBI next month.

The possibility of a repo rate hike at the upcoming Monetary Policy Committee (MPC) meeting is apparent. Senior Economist Vikram Chhabra said there are 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 per cent 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 rupee appreciation provides some breathing room to the RBI,” Chhabra said.

“The combined effect of elevated living costs and potentially higher borrowing rates could weigh on housing affordability, dampen homebuyer sentiment, and introduce some near-term tightness in the residential real estate market,” Knight Frank India, National Director Research, Vivek Rathi said.

The consumer price index (CPI) based retail inflation rose to 5.54 per cent in September, as a sustained uptick in food & beverages (F&B), restaurant services and transport inflation played a key role in pushing up the October headline number.

Data released by the Ministry of Statistics & Programme Implementation showed that food inflation spiked to 8.94 per cent in October from 7.74 per cent in the previous month.

Of the 12 categories, including food items and services, 11 showed hardening in inflation. Retail inflation in restaurant and accommodation services was 10.06 per cent, F&B was 8.51 per cent, and personal care and miscellaneous goods and services were at 10.14 per cent.

The top five items with high inflation were onion (116.22 per cent), garlic (60.74 per cent), silver jewellery (52.39 per cent), ginger (48.32 per cent) and lemon (47.30 per cent).

This is the first time in two years that retail inflation has breached the RBI’s upper tolerance band of 6 per cent. The central bank is mandated to keep inflation within the range of 2-6 per cent. In October 2024, retail inflation was 6.25 per cent.

The October retail inflation is a key data point before the December 2-4 meeting of the RBI monetary policy committee.

Moreover, the deficient monsoon and inadequate replenishment of reservoir levels have heightened concerns regarding the rabi crop outlook and food inflation.

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