Food, fuel and precious metals drive September retail inflation to 23-month high of 5.5%

Retail inflation rose to a nearly two-year high of 5.5% in September 2026, driven up by a continued acceleration in food and fuel inflation, official data released on Monday (October 12, 2026) showed.

Inflation as measured by the Consumer Price Index (CPI) in September 2026 was the highest since October 2024. The rate in September also marked a substantial increase over the 4.8% rate seen in August 2026. The Reserve Bank of India’s (RBI) upper comfort limit for retail inflation is 6%. 

According to economists, this acceleration of inflation shows the RBI’s Monetary Policy Committee was correct in hiking rates in its most recent policy review last week. 

“With the CPI inflation jumping to a slightly higher than forecast 5.5% in September 2026 and appearing set to cross 6% in the ongoing month, the MPC’s recent rate hike appears prescient,” Aditi Nayar, chief economist at ICRA said. 

“While the monsoon has turned out to be fairly dismal, with inadequate replenishment of reservoirs clouding the outlook for rabi sowing, another rate hike in December seems quite certain,” she added. “Crude oil prices currently remain elevated, and their trajectory will keenly influence the likelihood and extent of further rate tightening in 2027.”

Inflation in the food and beverages category jumped to 7.4% in September 2026 from 5.7% in the previous month. The new series of the CPI does not provide category-wise historical data before January 2026. The data shows September’s food inflation rate is the highest during the period for which there is data.

Inflation in the transport segment came in at 5% in September 2026, having risen for the last five consecutive months. Taken together, the food and transport prices pushed inflation in the ‘restaurant and accommodation services’ segment to 9.4%, capping off a seven-month streak of consecutive acceleration.

The third segment that saw elevated inflation was that of ‘personal care, social protection and miscellaneous goods & services’, which saw inflation come in at 13.75% in September 2026, although this was the lowest it has been in the period for which there is data. 

“In the case of personal care, where inflation was 13.8%, it is mainly due to silver and gold where prices are determined externally,” Madan Sabnavis, chief economist at the Bank of Baroda, said. “Industries like durables, FMCG, automobile have announced an increase in prices and this should get reflected in the CPI over the next few months.”