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10h ago

India Retail Inflation Tops RBI Ceiling at 6.09%

A sharp rise in food prices with price pressures spreading across most categories makes a December rate hike by the Reserve Bank of India more likely.

A man walks past an installation of the Rupee logo and Indian currency coins outside the Reserve Bank of India (RBI) headquarters in Mumbai, India, April 9, 2025. REUTERS/Francis Mascarenhas
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Inflation seen hitting RBI's 6% ceiling in October, putting rate policy in focus | Today News
An employee at Emerald Packaging operates a machine that produces grocery bags at the company’s facility in Union City, California, U.S., April 6, 2026. As the U.S.-Israel conflict with Iran continues, Kevin Kelly, chief executive of Emerald Packaging, believes prices are expected to rise for the plastic resin that Emerald Packaging turns into produce bags for grocery stores, with a two‑step jump over a few weeks—from 45 to 55 and then to 85 cents per pound—setting up likely disputes with customers and possible force majeure cancellations of contracts it can no longer afford to honor. REUTERS/Carlos Barria

Overview

  • Official data released on Nov. 12 show headline consumer inflation rose to 6.09% in October, crossing the RBI’s 6% upper tolerance.
  • Food was the main driver, with food inflation near 8.94% and extreme jumps in items such as onions, garlic, ginger and lemon.
  • The RBI raised the repo rate to 5.50% in October and market economists now see a further 25 basis point increase at the December 2–4 Monetary Policy Committee meeting as likely.
  • Inflationary pressures have broadened, with 11 of 12 CPI categories recording higher inflation and rural inflation (6.63%) outpacing urban inflation (5.41%), which squeezes rural household real incomes.
  • Key near-term risks that will shape inflation and policy are El Niño and poor monsoon effects on crops, elevated global crude and commodity prices, and rupee swings, and under the RBI’s target framework a single monthly breach does not itself trigger a formal policy breach.