Inflation bites harder as food prices surge, more rate hikes loom
Official data released on Thursday revealed four of the top five items recording the highest inflation were vegetables
- Nov 12, 2026,
- Updated Nov 12, 2026 5:45 PM IST
For consumers, prices are set to pinch for longer with retail inflation now seen to be broad based and set to rise further in coming months, even though international crude oil prices may have softened.
Official data released on Thursday revealed that retail inflation as measured by the consumer price index had risen to a two-year high of 6.09% in October, breaching the Reserve Bank of India’s (RBI's) upper tolerance limit. Food prices have hardened even more, and the consumer food price index-based inflation was at 8.94% last month as against 7.74% in September.
Retail inflation in two of the 13 broad categories was in double digits in October – 10.14% in personal care, social protection and miscellaneous goods and services, followed by 10.06% in restaurants and accommodation services. Inflation in the food and beverages basket was also high at 8.51%.
In fact, four of the top five items recording the highest inflation are vegetables. Onions, with 116.22% inflation in October, registered the highest rise last month, followed by 60.74% inflation in garlic. Silver jewellery with 52.39% inflation recorded the third highest rise last month, followed by ginger (48.32%) and lemon (47.3%).
Experts believe that retail inflation will continue to rise in coming months amidst an adverse base effect and a deficient monsoon making food more expensive. They have also warned that core inflation will rise further as companies will raise prices due to costlier inputs. They have also pencilled in more rate hikes by the RBI this fiscal, including at least a 25-basis point hike in the December policy review.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank noted that the October headline expectedly came in higher than 6%. “We expect the next few readings to remain elevated above 6% amid adverse base effect from GST, higher food prices and partial pass-through of higher commodity prices,” she said. She also expects the RBI to hike rates by additional 50 basis points in FY27, with further upside risks likely if food inflation flares up significantly and/or benign oil prices reverse trajectory.
Madan Sabnavis, Chief Economist at Bank of Baroda said inflation rise has become broad-based and 11 of the 12 broad sectors have witnessed higher inflation this month relative to September. “We do expect the RBI to consider either 25 or 50 bps hike in December given that inflation in November and December would also be around the level of 6% based on trajectory of food prices,” he said, adding that core inflation too will rise as companies in the FMCG space have started raising prices. “Also cost of mobiles, TVs, vehicles, health have gone up which will push it up to 4.5% mark by end of the year,” he further said.
The RBI in its October policy review had hiked the repo rate by 25 basis points and had pegged CPI inflation at 6% in the December 2026 quarter and had raised its forecast to 5.2% for FY27.
Aditi Nayar, Chief Economist, ICRA Ltd said core inflation is expected to inch up further in November 2026, partly owing to the unfavourable base effect arising from GST rationalisation, which would keep the headline CPI inflation elevated at about 6.1% in the month.
“Overall, ICRA expects CPI inflation to average at about 6.2% in Q3 FY2027, slightly higher than the MPC's projection for the quarter (+6.0%), before easing modestly thereafter as the adverse base effect dissipates. However, risks remain tilted to the upside, reflecting the impact of the deficient and uneven monsoon, while crude oil prices remain a key monitorable,” she said.
DO READ: Will October inflation breach 6%? What it means for interest rates, EMIs and GDP growth
For consumers, prices are set to pinch for longer with retail inflation now seen to be broad based and set to rise further in coming months, even though international crude oil prices may have softened.
Official data released on Thursday revealed that retail inflation as measured by the consumer price index had risen to a two-year high of 6.09% in October, breaching the Reserve Bank of India’s (RBI's) upper tolerance limit. Food prices have hardened even more, and the consumer food price index-based inflation was at 8.94% last month as against 7.74% in September.
Retail inflation in two of the 13 broad categories was in double digits in October – 10.14% in personal care, social protection and miscellaneous goods and services, followed by 10.06% in restaurants and accommodation services. Inflation in the food and beverages basket was also high at 8.51%.
In fact, four of the top five items recording the highest inflation are vegetables. Onions, with 116.22% inflation in October, registered the highest rise last month, followed by 60.74% inflation in garlic. Silver jewellery with 52.39% inflation recorded the third highest rise last month, followed by ginger (48.32%) and lemon (47.3%).
Experts believe that retail inflation will continue to rise in coming months amidst an adverse base effect and a deficient monsoon making food more expensive. They have also warned that core inflation will rise further as companies will raise prices due to costlier inputs. They have also pencilled in more rate hikes by the RBI this fiscal, including at least a 25-basis point hike in the December policy review.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank noted that the October headline expectedly came in higher than 6%. “We expect the next few readings to remain elevated above 6% amid adverse base effect from GST, higher food prices and partial pass-through of higher commodity prices,” she said. She also expects the RBI to hike rates by additional 50 basis points in FY27, with further upside risks likely if food inflation flares up significantly and/or benign oil prices reverse trajectory.
Madan Sabnavis, Chief Economist at Bank of Baroda said inflation rise has become broad-based and 11 of the 12 broad sectors have witnessed higher inflation this month relative to September. “We do expect the RBI to consider either 25 or 50 bps hike in December given that inflation in November and December would also be around the level of 6% based on trajectory of food prices,” he said, adding that core inflation too will rise as companies in the FMCG space have started raising prices. “Also cost of mobiles, TVs, vehicles, health have gone up which will push it up to 4.5% mark by end of the year,” he further said.
The RBI in its October policy review had hiked the repo rate by 25 basis points and had pegged CPI inflation at 6% in the December 2026 quarter and had raised its forecast to 5.2% for FY27.
Aditi Nayar, Chief Economist, ICRA Ltd said core inflation is expected to inch up further in November 2026, partly owing to the unfavourable base effect arising from GST rationalisation, which would keep the headline CPI inflation elevated at about 6.1% in the month.
“Overall, ICRA expects CPI inflation to average at about 6.2% in Q3 FY2027, slightly higher than the MPC's projection for the quarter (+6.0%), before easing modestly thereafter as the adverse base effect dissipates. However, risks remain tilted to the upside, reflecting the impact of the deficient and uneven monsoon, while crude oil prices remain a key monitorable,” she said.
DO READ: Will October inflation breach 6%? What it means for interest rates, EMIs and GDP growth