Food inflation to stay elevated; ICICI Bank sees 25 bps RBI rate hike in December
Food inflation in India is projected to remain elevated in the coming months due to a shortfall in crops. The Reserve Bank of India is anticipated to raise interest rates by 25 basis points to manage retail inflation. Factors such as weak monsoon and high energy prices contribute to the rising inflation. Many essential food items are experiencing upward price pressure amid ongoing inflationary…
India's retail inflation hit a two-year high of 6.09% in October, surpassing the Reserve Bank of India's (RBI) 6% tolerance limit. This development has heightened expectations of another rate hike in December. Headline inflation has been consistently rising since November 2025, crossing the RBI's target of 4% in June. The latest figures, influenced by both food and non-food prices, align with predictions.
The overall consumer price index (CPI) increased by 6.1% in October, indicating a broad-based inflation trend, with food remaining the main driver. Food and beverages alone accounted for 37% of the CPI basket, with inflation soaring to 8.51% in October, up from 7.36% in September. Core inflation, excluding food and fuel, stood at 4.6%.
The Monetary Policy Committee (MPC) has projected headline CPI inflation at 5.2% for the fiscal year, with quarterly projections of 6% and 5.7% for December 2026 and March 2027. Economists anticipate a rate hike of 25 basis points at the December policy meeting, due to rising inflation expectations and broader price pressures.
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- Inflation tops RBI’s 6% ceiling, raises December rate hike prospects hindustantimes.com
