Food, fuel push retail inflation to 23-month high of 5.54% in September

India's retail inflation, measured by the Consumer Price Index (CPI), rose sharply to a 23-month high of 5.54 per cent in September from a revised 4.83 per cent in August, led by crude-linked transportation and services costs and higher food prices, data released by the National Statistics Office (NSO) on Monday showed.

On a back-series basis, this is the highest since October 2024, when inflation stood at 6.21 per cent. Retail inflation has now stayed above the Reserve Bank of India's (RBI's) 4 per cent target for four consecutive months, though it remains within the 6 per cent upper tolerance limit.

On a month-on-month basis, the combined index rose 0.69 per cent to 109.49 from 108.74.

Food inflation, measured by the Consumer Food Price Index (CFPI), rose to 7.74 per cent in September from 5.97 per cent in August. That is the highest since December 2024, when it stood at 8.39 per cent on the old 2012 series.

Onion led the surge. Its inflation more than doubled to 108.09 per cent from 48.78 per cent in August. Garlic (54.62 per cent) and lemon (36.41 per cent) also climbed faster, while ginger eased slightly to 62.85 per cent.

Tomato deflation narrowed to 8.62 per cent from 31.09 per cent in August, and potato deflation to 11.50 per cent from 13.15 per cent.

Outside food, precious metals remained a major contributor. Silver jewellery inflation eased to 87.80 per cent from 106.81 per cent but remained the second-highest among key items, according to the NSO. This kept the personal care, social protection and miscellaneous goods division at 13.75 per cent, the highest among all 12 major divisions.

The fuel impact was evident in some user groups. Inflation in restaurants and accommodation services rose to 9.36 per cent from 8.38 per cent. Transport inflation rose to 5.01 per cent from 4.6 per cent.

Rural inflation rose to 6.08 per cent from 5.24 per cent, while urban inflation rose to 4.88 per cent from 4.31 per cent.

Among states with a population of more than 50 lakh, Tamil Nadu had the highest headline inflation (6.81 per cent). It was followed by Odisha (6.70 per cent), Madhya Pradesh (6.68 per cent), Telangana (6.64 per cent) and Andhra Pradesh (6.29 per cent).

Going ahead, the state of the kharif crop is important as food inflation will be largely driven by it, reckoned Madan Sabnavis, chief economist at Bank of Baroda. “As of now higher inflation is mainly due to depletion of earlier stocks as we head to the new season. Crop arrivals are hence important,” he said.