Newsletter
India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 5.54% in September 2026, its highest level in 23 months, from 4.82% in August.
Decoding the numbers: prices rose faster in September, adding pressure to household budgets.
The RBI had forecast average inflation of 4.9% for July-September. That is a three-month average, so September’s figure alone cannot tell us whether inflation exceeded its forecast.
Food inflation rose sharply to 7.74%, up from 5.97% in August.
Transport costs also increased, with goods transport prices rising 14.73% and personal transport prices climbing 7.46%.
Price pressures extended beyond food. The category covering personal care, social protection and miscellaneous goods and services recorded inflation of 13.75%. Restaurant and accommodation prices rose 9.36%.
What the RBI expects: after its latest policy decision, Governor Sanjay Malhotra said inflation could average nearly 5.8% over the next three quarters. The RBI raised its inflation forecast for FY27 to 5.2%, from 5% earlier.
He also warned that a weak monsoon and strong El Niño conditions could hurt farm production and reduce spending in rural areas.
However, large foodgrain stocks and government measures could help limit the impact.
Why oil matters: India depends heavily on imported energy, leaving it exposed to supply disruptions from the Iran war. Before the conflict, a large share of its energy supplies passed through the Strait of Hormuz.
Higher oil prices can make transport and deliveries more expensive, pushing up the prices of everyday goods.
Experts expect oil prices to remain volatile in the near term as the Middle East conflict and Hurricane Isaias threaten supplies.
