Retail Inflation Shoots Up To 5.54% In September, Onion Prices Double

India's retail inflation rose to 5.54 per cent in September 2026 on a year-on-year basis (YoY), driven by higher food prices, provisional data by the National Statistics Office (NSO) showed on Monday. This was the highest inflation rate recorded this year, pushing up household costs.

The consumer price index (CPI)-based inflaton came in higher than the 4.83 per cent reading recorded in August.

The figure was released day after the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) hiked the benchmark lending rate or the repo rate by 25 basis points to 5.50 per cent - a move to curb inflation.

This was the first time the headline inflation rate crossed the 5 per cent mark in the new CPI series.

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According to the data released by the government, food inflation rose to 7.74 per cent in September from 5.97 per cent in August.

Food prices was among the key drivers of the higher inflation rate. Food and beverages saw an inflation rate of 7.36 per cent in September.

Onion, ginger, garlic, lemon were among the top food items that saw the highest rate of inflation. Onion inflation rose to 108.09 per cent in September from 48.78 per cent in August. Garlic inflation came in at 54.62 per cent in September versus 43.60 per cent in August, while lemon inflation was up from 15.15 per cent to 36.41 per cent.

Transport, personal care, social protection and miscellaneous goods and services were among the other key drivers.

Rural inflation was higher than urban inflation. "Year-on-year inflation rate based on All India Consumer Price Index (CPI) with base year 2024 for the month of September, 2026 over September, 2025 is 5.54 per cent(Provisional). Corresponding inflation rates for rural and urban are 6.08 per cent and 4.88 per cent, respectively," according to a statement by the Ministry of Statistics and Programme Implementation.

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The government data further shows that in August, rural and urban inflation were recorded at 5.24 per cent and 4.31 per cent, respectively.

"CPI inflation came in line with expectations as higher food and energy prices continued to feed into broader metrics. Amid continued stickiness in commodity prices and rising global yields, we expect the RBI to continue to remain firmly on a path of rate hikes. We see two more hikes from the RBI this financial year," Garima Kapoor, deputy head of research and economist at Elara Capital, told NDTV on Monday.

According to Nirav Karkera, head of research and fund manager at W by Groww, the rates could go lower towards the end of the year, "though a soft base means the headline will take longer to show it."

"It depends on healthy kharif arrivals, government action to cool vegetable prices, softer crude and a stable rupee. With costs rising and demand soft to stable, policy rates are likely to stay tight as the RBI works to keep inflation within its tolerance band," he told NDTV.

At the state level, Tamil Nadu recorded the highest headline inflation among states with a population of more than 50 lakh, at 6.81 per cent, followed by Odisha at 6.70 per cent and Madhya Pradesh at 6.68 per cent.