India CPI Inflation Jumps To 5.54% In September As Onion Prices Double, Food Inflation Hits 7.74%
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India's retail inflation accelerated sharply in September as households faced higher food prices, particularly for vegetables. The latest CPI print comes days after the RBI raised the repo rate to 5.5%.
India's retail inflation jumped to 5.54% in September from 4.83% in August as a sharp rise in food prices pushed up household costs, taking the headline CPI closer to the Reserve Bank of India's upper tolerance limit of 6%.
Food inflation accelerated to 7.74% in September from 5.97% in August, according to data released by the Ministry of Statistics and Programme Implementation on Monday. Rural inflation rose to 6.08%, while inflation in urban areas increased to 4.88%.
The biggest pressure came from the food basket, where onion prices more than doubled from a year earlier. Onion inflation surged to 108.09% in September, while garlic inflation climbed to 54.62%. Lemon prices were also 36.41% higher from a year earlier.
The September inflation print is particularly significant as it comes after the RBI raised the repo rate by 25 basis points to 5.50% at its October policy meeting, its first increase in nearly four years. Inflation has now remained above the central bank's 4% medium-term target for four consecutive months.
Food Inflation Rises To 7.74% In September
The increase in vegetable and other food prices pushed the Consumer Food Price Index sharply higher during September. Apart from onions, garlic and lemons, higher prices across the food basket added to the pressure on household expenses.
Food and beverages inflation rose to 7.36% from 5.66% in August. The pressure was also more pronounced in rural India, where food inflation reached 8.06%, compared with 7.18% in urban areas.
Price pressures were not limited to food. Restaurants and accommodation services recorded inflation of 9.36%, while clothing and footwear inflation stood at 3.93%. Housing and utilities inflation was at 2.74%.
September Inflation Moves Closer To RBI's 6% Limit
The 5.54% September CPI reading leaves headline inflation less than half a percentage point below the RBI's upper tolerance limit of 6%.
The latest number was also higher than the 5.4% forecast in a Reuters poll. Core inflation, which excludes volatile food and fuel components, accelerated to 4.6% in September from 4.16% in August, according to ICRA estimates.
The RBI had raised the repo rate to 5.50% at its October meeting amid concerns over broadening price pressures. The central bank also raised its FY27 inflation forecast to 5.2% from 5% earlier.
With food prices rising and headline inflation moving closer to the RBI's tolerance ceiling, the September CPI data adds another key data point for the central bank ahead of its next monetary policy decision.
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Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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