India’s retail inflation rate rose to 5.54 percent in September 2026 from 4.83 percent in August, according to government data released on Monday. The main reason for this was the rapid increase in the prices of food items, especially vegetables. This is the fourth consecutive month that inflation has remained above the Reserve Bank of India’s (RBI) medium-term target of 4%. This reflects persistent inflationary pressures, at a time when higher global crude prices, weaker rupee and concerns over agricultural production are weighing on inflation. Retail inflation rose above the RBI’s 4% target for the first time in June, after rising to 4.38% from 3.93% in May. The rural CPI inflation rate was 6.08% in September, while it was 5.24% in August. At the same time, the urban inflation rate was 4.88%, compared to 4.31% last month.

India’s CPI inflation rose to 5.54% in September 2026 from 4.83% in August, according to government data.

Food inflation rose to 7.74% from 5.97% in August.

— ANI (@ANI) October 12, 2026

Inflation continues to rise

Retail inflation for September was estimated at 5.40% in a Reuters survey of 41 economists conducted between October 5 and 7. This was higher than the 4.82% rate reported in August and estimates ranged from 4.90% to 5.90%. The September figures come days after RBI’s Monetary Policy Committee (MPC) hiked the benchmark repo rate by 25 basis points to 5.50% on October 7. This was the first interest rate hike in nearly four years due to rising inflation risks.

The central bank has also raised the inflation forecast for fiscal 2027 to 5.2% from 5.0%. The reasons behind this are higher crude oil prices, higher cost of food items and impact of weak rupee on imported inflation. Inflation rate of 5.54 percent in September is the highest figure so far in 2026 under India’s revised CPI range. The new base year for this series is 2024 and the consumption basket has been updated. Earlier, consumer prices rose by 4.83 percent in August and 4.45 percent in July.

RBI has raised inflation estimates

These latest inflation figures come after the RBI on October 7 raised the inflation estimate in its monetary policy review. This indicates a growing concern about continued and further spread of price pressures. The central bank raised the CPI inflation estimate for FY27 to 5.2% from 5.0% in August. RBI now expects inflation to remain at 4.9% in the second quarter of FY27, after which it will rise to 6.0% in the December quarter and 5.7% in the March quarter. Inflation is estimated at 5.6% for the first quarter of FY28, with risks considered balanced.