Reserve Bank of India flags widening inflation as 37% of CPI basket crosses 4%

Key facts

• The Reserve Bank of India (RBI), in its October Monetary Policy Report, stated that the weighted share of CPI items priced above the 4 per cent target rose from 23 per cent in April to nearly 37 per cent in August.
• CPI inflation rose to 4.8 per cent in August from 4.5 per cent in July, while core inflation excluding food and fuel increased to 4.2 per cent from 3.9 per cent.
• Food and beverages inflation rose to 5.9 per cent in August, with animal protein and spices accounting for nearly 48 per cent of the 200-basis-point rise in food inflation between April and August.
• CPI fuel inflation rose to 5.2 per cent in August from 0.4 per cent in April, partly reflecting the pass-through of higher global crude prices.
• The Monetary Policy Committee (MPC) raised the policy repo rate by 25 basis points to 5.5 per cent and shifted its stance to calibrated tightening.
• The RBI raised its FY27 inflation forecast to 5.2 per cent from 5 per cent earlier.
• RBI Governor Sanjay Malhotra said the extent and duration of the rate-hike cycle would depend on how far price pressures broaden and second-round effects emerge.