New Delhi: Prices in India rose faster in September. September retail inflation climbed to 5.54 per cent, up from 4.83 per cent in August, official data released on Monday, 12 October 2026, showed. Food prices rose even more. Food inflation jumped to 7.74 per cent from 5.97 per cent. Onion prices were more than double what they were a year ago.
This is the highest figure since the new price index began in January 2026, and The Hindu said it is the highest since October 2024. Here is a simple guide to what the numbers mean for your kitchen budget and your loan EMI.
Table of Contents
What is retail inflation?
Retail inflation tells us how fast the prices of everyday things are rising. It covers what families buy, such as food, clothes, fuel, rent and school fees. It compares prices this month with prices in the same month last year.
The data comes from the National Statistics Office (NSO), which is part of the Ministry of Statistics and Programme Implementation. Its staff collect prices every week from 1,407 markets in towns and cities and from 1,465 villages. The current index uses 2024 as its base year.
September retail inflation: the key numbers
These figures come from the NSO press release of 12 October 2026. They are provisional, which means they may be revised slightly next month.
- Overall retail inflation: 5.54 per cent in September, up from 4.83 per cent in August.
- Food inflation: 7.74 per cent, up from 5.97 per cent.
- Villages: 6.08 per cent, up from 5.24 per cent.
- Towns and cities: 4.88 per cent, up from 4.31 per cent.
- Food inflation in villages was 8.06 per cent, and in towns and cities it was 7.18 per cent.
Reuters noted that this is the fourth month in a row that inflation has stayed above the Reserve Bank of India’s 4 per cent target.
Which items became costlier?
Kitchen items led the rise. These five items saw the biggest price jumps compared with September last year:
- Onion: 108.09 per cent, up from 48.78 per cent in August. In simple words, onion prices have more than doubled in one year.
- Silver jewellery: 87.80 per cent.
- Ginger: 62.85 per cent.
- Garlic: 54.62 per cent.
- Lemon: 36.41 per cent.
Some items became cheaper. Potato prices were 11.50 per cent lower than a year ago, and tomato prices 8.62 per cent lower.
Outside the kitchen, eating out has become costly. Prices at restaurants and hotels rose 9.36 per cent. The group that includes personal care items and jewellery rose 13.75 per cent. Madan Sabnavis, chief economist at Bank of Baroda, said this was mainly due to gold and silver, whose prices are set by world markets. Transport costs rose 5.01 per cent.
Why are prices going up?
Economists pointed to a few main reasons:
- Costlier food: Aditi Nayar, chief economist at the rating agency ICRA, said most of the rise from August to September came from food and drinks, The Indian Express reported.
- Low prices last year: Food prices had actually fallen in September 2025, by 2.33 per cent, said Devendra Pant of India Ratings and Research. When last year’s prices were low, this year’s rise looks bigger. Economists call this the base effect.
- Weak monsoon: Rains were poor this year, and El Nino weather conditions add to the risk for crops, The New Indian Express reported, citing economists.
- Costly oil: Reuters said world crude oil prices have stayed above 100 dollars a barrel because of the war between the US and Iran.
- Weak rupee: The rupee has fallen about 7 per cent against the US dollar and is close to its lowest level ever, Reuters said. This makes imported goods more costly.
Price rises are also spreading. The Indian Express reported that 319 of the 358 items in the index became costlier in September compared with August. In February, before the war in West Asia began, the number was 236.
Which states saw the highest inflation?
Among states with more than 50 lakh people, these five had the highest retail inflation in September:
- Tamil Nadu: 6.81 per cent
- Odisha: 6.70 per cent
- Madhya Pradesh: 6.68 per cent
- Telangana: 6.64 per cent
- Andhra Pradesh: 6.29 per cent
Delhi was much lower, at 3.40 per cent.
What it means for the RBI and your EMI
The government has asked the Reserve Bank of India (RBI) to keep retail inflation close to 4 per cent. It can go up to 6 per cent or down to 2 per cent. September’s figure is still below the upper limit of 6 per cent, but it is getting close.
The RBI has already acted. On 7 October 2026, it raised the repo rate by 0.25 percentage points to 5.50 per cent. The repo rate is the interest rate at which banks borrow from the RBI. It was the first rate rise in nearly four years. We explained what this means for home and car loans in our story on the RBI repo rate hike and your EMI.
The RBI expects inflation to average 5.2 per cent this financial year, Reuters reported, and about 6 per cent in October to December. Several economists now expect one more rate rise in December. Madhavi Arora of Emkay Global Financial Services expects two more small rises, one in December and one in February. If that happens, loans may become a little more costly again.
Read how the RBI is trying to support the weak rupee in our report on the RBI dollar window for oil companies.
Will prices keep rising?
Aditi Nayar of ICRA said inflation appears set to cross 6 per cent in October, The Hindu reported. Madan Sabnavis said companies that make home appliances, cars and daily use packaged goods have announced price increases. These may show up in prices over the next few months. He said the new kharif crop, sown in the monsoon season, will be important for food prices.
Onions cost more now, but they are still a healthy part of most Indian meals. Read about the health benefits of onions.
Short FAQ
Is 5.54 per cent above the RBI’s limit?
No. The upper limit is 6 per cent. But it is well above the 4 per cent target, and it is the highest figure in the new series.
When will the next inflation figure come out?
The NSO says retail inflation data for October 2026 will be released on 12 November 2026, or on the next working day if that date is a holiday.
Sources
- National Statistics Office, Ministry of Statistics and Programme Implementation, Press Release of Consumer Price Index on Base 2024=100 for September 2026, 12 October 2026
- The Hindu, Food, fuel and precious metals drive September retail inflation to 23 month high of 5.5%, 12 October 2026
- The Indian Express, Days after RBI rate hike, data shows inflation jumped to 5.54% in September, 12 October 2026
- Reuters, India Sept inflation nears RBI tolerance ceiling, boosting case for further rate hikes, 12 October 2026
- Reuters, India raises policy rate by 25 bps, first hike in nearly four years, 7 October 2026
- The New Indian Express, Retail inflation jumps to 5.54% in September as onion prices surge 108%, 12 October 2026
- NDTV Profit, Inside September’s 5.54% CPI inflation spike: onion prices double, 12 October 2026