Inflation (CPI)
In September 2026, retail inflation was 5.54%, up from a record low of 0.25% just eleven months earlier. The Consumer Price Index (CPI) tracks how much a fixed basket of everyday goods and services, including food, fuel, rent, clothing and school fees, costs compared with a year earlier. When CPI inflation rises, your money buys a little less than it used to.
The RBI’s entire job, in one sentence, is keeping this number close to 4%.
Too much inflation erodes savings and makes daily life more expensive faster than wages tend to rise. Too little, or falling prices, can signal an economy where people are spending less. The RBI’s official target is 4%, with a tolerance band of 2% to 6%. Since January 2026, India measures CPI using a new basket with 2024 as its base year.
A weak monsoon cut harvests, and onion prices more than doubled on a year earlier. Food inflation jumped to 7.74%, and restaurant prices rose 9.36% as expensive gas and ingredients were passed on to diners. It was the fourth straight month above the RBI’s target.