India’s inflation picked up in September as food prices rose faster, while the Reserve Bank of India (RBI) cited external supply risks and exports and activity indicators remained firm, leaving price pressures alongside signs of economic strength.
The Ministry of Statistics and Programme Implementation (MoSPI) said the consumer price index (CPI) rose 5.54% year over year in September, provisionally, after a final 4.83% increase in August. Food inflation was 7.74%, up from 5.97%. Rural CPI inflation reached 6.08%, compared with 4.88% in urban areas; rural food inflation was 8.06%, against 7.18% in cities.
In its Oct. 23 Bulletin, the RBI identified tensions in West Asia and supply-chain interruptions as factors adding to inflation pressure. It also said high-frequency indicators pointed to strength in industry and services. The bank’s release notes that the article reflects its authors’ views, which may not be the institution’s own position.
The RBI’s Monetary Policy Committee (MPC) had acted before the September CPI figures were published: its rate resolution came on Oct. 7, while MoSPI released the inflation data on Oct. 12. The committee raised the repo rate by 25 basis points to 5.50% and shifted to calibrated tightening. It projected inflation of 5.2% for fiscal 2026-27, including 6.0% in the third quarter.
The MPC also saw a deficient southwest monsoon and El Niño as threats to agriculture and rural demand. It said foodgrain stocks and government supply measures could cushion the effects. The Oct. 23 Bulletin reported double-digit merchandise export growth in the fiscal year’s first half alongside a narrower trade deficit. It also noted stronger foreign direct investment, external commercial borrowing and remittance flows in August, as FCNR(B) swap-window inflows added to reserves.
The International Monetary Fund projected India’s growth at 7.0% for fiscal 2026-27, citing private consumption and services; the RBI’s growth projection is 7.1%. MoSPI has scheduled the October CPI release for Nov. 12, or the next working day if that date is a holiday. The next MPC meeting is set for Dec. 2 to 4.
