Business & Finance

October CPI Inflation Hits 6.09%, Exceeding RBI’s Upper Limit

By Smriti Jain

Consumer Price Index (CPI) inflation for October rose to 6.09%, surpassing the Reserve Bank of India’s (RBI) tolerance threshold of 6%. Retail inflation increased from 5.54% in September to 6.09% in October, according to government data released on Thursday. Rural inflation stood at 6.63%, while the urban rate was 5.41%. Food inflation, measured by the All India Consumer Food Price Index (CFPI), reached a provisional 8.94% in October 2026 from a year earlier, with 9.09% in rural areas and 8.68% in urban areas. Among the five items with the highest inflation, onion prices rose by 116.22%, garlic by 60.74%, silver jewellery by 52.39%, ginger by 48.32% and lemon by 47.30%. This marks the first time in two years that retail inflation has crossed the RBI’s upper tolerance limit. The RBI’s mandate is to keep inflation within a 2‑6% band, with 4% as the ideal target. The last time retail inflation exceeded this threshold was in October 2024, when it was 6.25%. The October figures will be a key input for the RBI’s monetary policy committee meeting scheduled for December 2‑4. In October, the RBI raised its benchmark policy rate by 0.25 percentage points to 5.50%, its first increase in nearly four years, and signalled that further hikes could be considered as inflation rises, the rupee remains weak and crude oil prices stay elevated. Garima Kapoor, deputy head of research and economist at Elara Securities India, said the CPI data aligned with expectations, noting that food inflation firmed and its pass‑through was evident across the board. She added that inflation is unlikely to cool off immediately and that the RBI may hike rates by another 50 basis points over the next six to nine months. Radhika Rao, senior economist at DBS Bank, told Reuters that headline inflation tested past the upper end of the RBI’s tolerance band in October, reaching a two‑year high, and that the central bank’s quarterly projection is likely to be revised higher. She said the data reinforced expectations of a second successive rate hike in December.