Retail Inflation Rises To 5.54% In September As Food Prices Surge

India's retail inflation increased to 5.54% in September 2026, crossing the 5% threshold for the first time under the new Consumer Price Index (CPI) series, as rising food prices increased household expenses.

According to data released on Oct 12, headline inflation rose from 4.83% in August, marking the sixth consecutive monthly increase since March.

The latest reading remained within the Reserve Bank of India's (RBI) 2% to 6% tolerance band but moved further above its 4% inflation target.

Food Inflation Jumps To 7.74% As Onion Prices Surge

Inflation measured by the Consumer Food Price Index (CFPI) accelerated to 7.74% in September from 5.97% in August.

Onions recorded the steepest increase among major food items, with annual inflation reaching 108.09%, compared with 48.78% previously.

Garlic inflation climbed to 54.62% from 43.60%, while lemon inflation increased to 36.41% from 15.15%.

However, some vegetables provided relief to consumers.

Potato prices declined 11.50% year-on-year, while tomatoes became 8.62% cheaper.

Silver jewellery inflation remained elevated at 87.80%, although it eased from 106.81% in the preceding month.

The figures highlight considerable differences in price movements across essential household purchases.

Rural Inflation Crosses 6%

Rural retail inflation increased to 6.08% in September from 5.24% in August, exceeding the central bank's upper tolerance threshold.

Urban inflation rose more moderately to 4.88% from 4.31%.

Consequently, the rural-urban inflation gap widened to 1.20 percentage points from 0.93 percentage points.

Among major states, Tamil Nadu reported the highest inflation at 6.81%, followed by Odisha at 6.70%, Madhya Pradesh at 6.68%, Telangana at 6.64% and Andhra Pradesh at 6.29%.

Price pressures also persisted across several non-food categories.

Personal care, social protection and miscellaneous goods and services registered inflation of 13.75%.

Restaurants and accommodation services recorded inflation of 9.36%, including 9.39% for food and beverage serving services.

Transport inflation stood at 5.01%, with personal transport operating costs rising 7.46%.

Meanwhile, health inflation was 1.40%, housing and utilities recorded 2.74%, and education services stood at 3.94%.

The September data underline growing price pressures, particularly on rural households and food consumers.