Retail inflation rose to 6.09% in October 2026, its highest level since October 2024, when it stood at 6.21%. Inflation was just 0.25% in October 2025 and 5.54% in September 2026. The retail inflation rate has been rising every month for the past 12 months.
The primary driver of rising retail inflation was food inflation. Food inflation climbed to 8.94% in October 2026, up from 7.74% in September. This is the highest level since November 2024, when it stood at 9.04%. Food inflation was recorded at 8.68% in urban areas and 9.09% in rural areas.
Among food items, onion prices registered the sharpest increase of 116%. This was followed by garlic, which became 60.74% more expensive, ginger (48.32%) and lemons (47.30%). However, prices of some food items declined too. Potato prices fell by 14.24%, cauliflower by 10.57%, coconut by 5.60%, brinjal by 3.34% and cabbage by 1.92%.
Among different consumption segments, food prices increased by 8.94%, while beverages became 0.61% more expensive. Alcoholic beverages registered a price increase of 1.96%, while pan, tobacco and related products became 7.78% costlier. Inflation in clothing stood at 5.16% and footwear at 3.6%. Prices of household goods rose by 4.98%, while utensils became 7.1% more expensive. Medicines and healthcare products registered a price increase of 2.13%.
The Reserve Bank of India (RBI) has set a retail inflation target of 4%, with a tolerance band of 2 percentage points on either side. This means inflation is expected to remain within a range of 2% to 6%. However, inflation has now breached the upper limit of this tolerance band.
To contain inflation, the RBI raised the repo rate by 0.25 percentage points to 5.5% on October 7, 2026. This was its first rate hike after February 2023. With retail inflation now exceeding 6%, there is speculation that the RBI may raise the repo rate again at its December monetary policy review.