Retail inflation rises above 6% in October for first time in two years

India’s retail inflation, measured by the Consumer Price Index, rose to 6.09% in October from 5.5% in September, showed data released by the Ministry of Statistics and Programme Implementation on Thursday.

This is the first in two years that inflation has risen above 6%. Based on back-series data, the October inflation rate was the highest since October 2024, when it stood at 6.21%.

Retail inflation has been surging for 12 consecutive months since bottoming out at 0.04% in October 2025. This was due to rising food prices and an unfavourable base effect, The Indian Express reported.

According to data by the Union government, food inflation has increased to 8.9% from 7.7% in September.

Among the food items that recorded the highest price increases were onions at an 116% inflation rate, garlic at 61%, ginger at 48% and lemons at 47%.

Among states with a population of more than 50 lakh, Tamil Nadu recorded the highest retail inflation at 7.29%, followed by Telangana at 7.26%, Andhra Pradesh at 7.25%, Madhya Pradesh at 7.19% and Odisha at 7.17%.

The Reserve Bank of India is tasked with keeping inflation at 4%, with a tolerance band of 2% to 6%.

When inflation goes above the upper limit, central banks usually increase key lending rates to control inflation. Higher key lending rates translate to higher interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers, which is expected to help curb price rises due to high inflation.

On October 7, the Reserve Bank of India increased the repo rate by 25 basis points to 5.5%.

The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee reviews the rate every two months.

This was the first hike in the lending rate in nearly four years. The last hike was in February 2023, when the Reserve Bank of India raised the repo rate by 25 basis points to 6.5%.

A basis point is one-hundredth of a percentage point. Basis points are used to describe changes in interest rates and other financial instruments.

Edited by Sneha.