Inflation versus household budgets: Which expenses are rising fastest?

India’s retail inflation rose to 5.54% in September 2026, but the pressure on household budgets varies sharply depending on what families spend their money on. While food and beverages inflation climbed to 7.4%, transport costs rose 5%, and inflation in restaurants and accommodation reached 9.4%, precious-metal jewellery continued to record much higher price increases, according to 360 ONE Asset’s September inflation report.

The divergence highlights why the headline Consumer Price Index (CPI) may not fully reflect the inflation experienced by individual households.

Food and eating out put pressure on budgets

Food and beverages, which account for 36.8% of the CPI basket, recorded inflation of 7.4% in September, up from 5.7% in August. Vegetables and pulses inflation surged to 9.2%, compared with 1.6% a month earlier, making them a key contributor to the increase in headline inflation.

Sugar inflation also accelerated to 13.8% from 10.9% in August, while fruit inflation rose to 10.8% from 9.6%. Inflation in edible oils stood at 8.3%.

For households that devote a large share of their income to groceries, these increases can translate into a more immediate squeeze on disposable income.

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Eating out has also become more expensive. Inflation in restaurants and accommodation rose to 9.4% in September, from 8.4% in August and 7.7% in July. However, this category accounts for only 3.3% of the CPI basket, limiting its direct contribution to headline inflation.

Transport, education and housing costs rise

Transport inflation increased to 5% in September from 4.6% in August, while education inflation rose to 3.9% from 3.7%. Housing, water, electricity and fuels recorded inflation of 2.7%, up from 2.6% a month earlier.

Although these increases are smaller than those in food and restaurant services, they affect recurring household expenses. Their impact also varies according to commuting requirements, school fees, housing arrangements and electricity consumption.

Precious metals remain an outlier

Precious-metal jewellery continued to record exceptionally high inflation, although the pace moderated in September. Inflation in gold, diamond and platinum jewellery eased to 31% from 36% in August, while silver jewellery inflation declined to 88% from 107%.

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These figures reflect price increases rather than the proportion of household budgets spent on jewellery. Since jewellery purchases are irregular for many families, the effect on their monthly expenses differs from the impact of rising food prices.

Why headline inflation tells only part of the story

The CPI measures price changes across a weighted basket of goods and services. Food carries a much larger weight than jewellery, meaning food-price movements can have a greater influence on the headline figure.

For households, however, the actual impact depends on spending patterns, income levels and consumption choices. Families spending heavily on groceries may face greater immediate pressure, while those with substantial education, transport or housing expenses may experience a different inflation burden.

With headline inflation rising to 5.54% in September from 4.83% in August, the composition of price increases matters as much as the overall number when assessing the pressure on household budgets.

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