India’s Retail Inflation hits 6.09% in October, breaches RBI’s upper limit for first time in two years

India’s retail inflation rose to 6.09 per cent in October, crossing the Reserve Bank of India’s upper tolerance limit of 6 per cent for the first time in two years. The Ministry of Statistics and Programme Implementation released the data on Thursday, and the rise was largely driven by higher food prices.

Inflation stood at 5.54 per cent in September. The October reading is also the highest since the new Consumer Price Index series with base year 2024 was introduced. The RBI’s target is 4 per cent, with a tolerance band of 2 per cent on either side.

Food prices lead the rise

Food inflation climbed to 8.94 per cent from 7.74 per cent in September. Onions recorded the highest inflation among food items at 116.22 per cent, followed by garlic at 60.74 per cent, ginger at 48.32 per cent and lemon at 47.30 per cent. Some prices fell. Potato prices declined 14.24 per cent, and cauliflower prices fell 10.57 per cent.

Rural areas hit harder

Rural inflation rose to 6.63 per cent from 6.08 per cent in September, while urban inflation rose to 5.41 per cent from 4.88 per cent. Among large states, Andhra Pradesh recorded rural inflation of 7.81 per cent and Karnataka 7.54 per cent. Uttar Pradesh recorded 7.20 per cent in rural areas against 4.88 per cent in urban areas.

What next for interest rate

The October retail inflation is a key data point before the December 2-4 meeting of the RBI monetary policy committee. Reports on the data says a December rate hike is likely.

The regulator had in October hiked its benchmark policy rate by 0.25 per cent to 5.50 per cent — its first hike in nearly four years.