India's inflation spreads as 37% of CPI items exceed 4% target
The RBI reports that over a third of the consumer price index basket now shows price gains above its 4% goal, signalling broader inflation pressures.
The Reserve Bank of India’s October Monetary Policy Report highlights a widening of price pressures across the consumption basket, with roughly 37% of items now registering inflation above the 4% target, up from 23% earlier in the year. August headline CPI rose to 4.8% and core inflation to 2.9%, reflecting higher food, beverage, and fuel costs, notably animal protein, spices, and global crude price pass-through. The diffusion index shows more items moving into higher inflation brackets, indicating a shift from isolated spikes to broader price increases.
In response, the Monetary Policy Committee lifted the policy repo rate to 5.5% and revised its FY27 inflation forecast to 5.2%. Governor Sanjay Malhotra warned that the pace and length of rate hikes will depend on the extent of inflation’s spread and potential second-round effects.
Why it matters
Rising, widespread inflation may prompt further monetary tightening, affecting prices, borrowing costs, and the Indian economy.
How this story developed
- Sep 22 How first-time buyers can protect mortgage rates before an offer is accepted
- Oct 6 Nationwide launched a reservation product that can lock a quoted mortgage rate for up to 90 days after a decision in principle.
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