Inflation may cross 6% in October-November: SBI Research warns of temporary spike

India’s retail inflation could see a sharp but temporary rise in the coming months, with SBI Research expecting CPI inflation to reach 4.7% in August and potentially cross the 6% mark in October and November. The report, however, expects inflation to ease towards around 5% in the fourth quarter of FY27, suggesting that the anticipated spike may not translate into a sustained inflationary trend.

The warning comes after India’s CPI inflation rose to a 19-month high of 4.45% in July 2026, from 4.38% in June. The increase was driven primarily by food inflation, which rose to 5.52%, with higher prices of items such as onions, ginger and garlic contributing to the pressure. Rural inflation was also considerably higher at 4.84%, compared with 3.96% in urban India.

SBI Research expects the August inflation print to rise to 4.7%. It further estimates that inflation could just breach 6% in October and November before declining to around 5% in Q4 FY27. The report also notes that, based on historical trends, inflation in the fourth quarter could eventually turn out to be lower than current forecasts.

The expected increase is taking place even as underlying price pressures remain relatively contained. Core CPI, excluding food and fuel, declined marginally by 5 basis points to 3.85% in July, while core CPI excluding gold stood at 3.44%. Imported inflation also moderated, falling from 8.1% in June to 7.3% in July.

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However, food prices remain a key concern. SBI Research said India’s food inflation increased to 5.52% in July from 5.32% in June, even as global food inflation eased to 8.35% from 9.84%. Domestic oils and fats inflation also moderated to 8.54% in July, while cereals inflation remained relatively low at 1.68%.

The report’s inflation outlook could have implications for monetary policy. Despite the expected temporary increase, SBI Research expects the RBI to maintain the repo rate at 5.25% during FY27. The assessment indicates that the central bank may look through a short-lived increase in headline inflation if core price pressures remain relatively moderate.

For households, a temporary move above 6% could mean renewed pressure on food and other everyday expenses, although the impact would depend on how broad-based the increase becomes. For borrowers and investors, the projected inflation trajectory also suggests that interest rates could remain stable rather than move sharply higher.

SBI’s broader assessment, therefore, is not one of persistently high inflation but of a temporary acceleration followed by moderation. If inflation eases as projected in the final quarter of FY27, the pressure on household budgets and monetary policy could gradually reduce.

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