Retail Inflation Climbs to 5.54% in September 2026: Food and Fuel Push Prices Up
Retail inflation, measured by the Consumer Price Index (CPI), rose to 5.54% in September 2026. It was about 4.8% in August 2026.
This is the highest reading since the new CPI series (base year 2024) began with January 2026 data, and a nearly two-year high overall.
Food and beverages inflation jumped to 7.4% in September from 5.7% in August. This is the highest food inflation reading in the new series.
Transport inflation rose to 5%, after rising for five months in a row. Inflation in "restaurant and accommodation services" reached 9.4%.
"Personal care, social protection and miscellaneous goods and services" showed 13.75% inflation, mainly because of high gold and silver prices, which are set by world markets.
Inflation is still inside the RBI's tolerance band of 2% to 6%. A week earlier, on October 7, 2026, the RBI's Monetary Policy Committee (MPC) had raised the repo rate by 25 basis points to 5.50%. Economists expect inflation may cross 6% in October because of a weak monsoon and high crude oil prices.
Consumer Price Index (CPI): How India Measures Retail Inflation
The Consumer Price Index (CPI) is a number that tracks how the prices of things a normal family buys change over time: food, clothes, rent, fuel, transport, medicines, school fees and more. When we say "retail inflation is 5.54%", we mean prices measured by the CPI are 5.54% higher than in the same month last year. The CPI is compiled by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) and is released every month.
September's 5.54% is a CPI reading. Even though food now has a smaller weight in the new basket, a jump in food and beverages inflation to 7.4% was still enough to push the overall number to its highest level in the new series.
Flexible Inflation Targeting (FIT) Framework
Flexible Inflation Targeting is the system under which the RBI's main job is to keep CPI inflation close to a target fixed by the government. India's target is 4%, with a tolerance band of 2% to 6%. It is "flexible" because the RBI also keeps economic growth in mind while setting interest rates. The six-member Monetary Policy Committee (MPC) decides the repo rate to meet this target.
At 5.54%, inflation is still under the 6% upper limit, but close to it. If it crosses 6% and stays there for three quarters, the RBI would be counted as having missed its target. This is why the MPC's rate hike a week earlier is seen as a step to keep inflation inside the band.
- CPI inflation, September 2026: 5.54% (August 2026: about 4.8%)
- Food and beverages inflation: 7.4% in September (5.7% in August)
- Transport inflation: 5%; restaurant and accommodation services: 9.4%
- Personal care, social protection and miscellaneous goods and services: 13.75% (driven by gold and silver)
- New CPI series: base year 2024; data from January 2026; weights from HCES 2023-24; 12 COICOP divisions; 358 items
- Inflation target: 4% (band 2% to 6%) for April 2026 to March 2031
- Repo rate: raised to 5.50% on October 7, 2026; stance "calibrated tightening"
- CPI is compiled by the NSO under MoSPI