GDP growth has been supported by sustained domestic demand and services, RBI officials said. File
| Photo Credit: Reuters
High-frequency data collected by the Reserve Bank of India (RBI) for October (till 19th), suggest a broad-based increase in food prices, said RBI officials in the October edition of RBI Bulletin, which was released on Friday (October 23, 2026).
“Among cereals, rice and wheat prices continued to increase. Prices of major pulses also went up sequentially. Edible oil prices also recorded a slow and broad-based increase, led by mustard and palm oil,” they wrote in the ‘State of the Economy’ article.
Among vegetables, while potato prices declined and the pace of onion price increases dropped, tomato prices picked up, they added.
Surprisingly, inflation in rural areas has been getting higher than that in urban areas. Inflation stood at 4.9% and 6.1%, respectively, in urban and rural areas in September. In August, urban and rural inflation stood at 4.3% and 5.2% respectively, the officials stated.
The majority of States/UTs recorded inflation in the range of 4-6% in September. Inflation ranged from 2.9% to 6.9% across states/UTs. States like Telangana, Tamil Nadu and Puducherry recorded inflation in excess of 6% across both rural and urban areas, they pointed out.
Stating that WPI inflation recorded its first double-digit rate in the new series (Base 2022-23) at 11.4% in September 2026, rising from 9.9% in August, reflecting a broad-based increase in prices, they said industrial and farm input costs remained elevated.
Spiralling food prices: on rising inflation
Inflation in the Output Producer Price Index surged to 11.4% in September 2026 from 9.8% in August, led by manufacturing products, and mining & quarrying, they said.
As per the article headline, CPI inflation edged up over the months and showed signs of greater generalisation across commodities, calling for a commensurate change in the monetary policy stance.
“The external headwinds are also being dealt with a slew of regulatory measures by the Reserve Bank to curb speculative activity in foreign exchange market,” they stated.
“Strong inflows under FCNR(B) swap window augmented reserves. Foreign Direct Investment (FDI), External Commercial Borrowing (ECB) and remittance flows strengthened in August. With strong exports growth, the trade deficit narrowed in September,” they added.
The headline Consumer Price Index (CPI) inflation rose to a 23-month high of 5.5% (YoY) in September from 4.8% in August, driven by a broad-based increase in food, fuel and core (CPI excluding food and fuel) components.
Eleven out of twelve divisions witnessed a sequential increase in inflation, they said.
Despite the West Asia conflict having entered its eighth month, keeping energy prices elevated and supply chains constrained, causing uncertainties in trade policies and volatility in financial markets, the Indian economy has withstood the shocks well, the officials wrote.
“The IMF raised India’s growth projection for 2026-27 by 60 basis points [bps] to 7%, from its July estimate, citing stronger-than-expected momentum, driven by resilient domestic demand and robust services activity. The high-frequency indicators maintained their upward trajectory,” they stated.
Emphasising that the Indian economy has been anchored by solid macroeconomic fundamentals and policy interventions to cushion downside risks, they said that despite being a net energy importer, its GDP growth has been supported by sustained domestic demand and services.
Published – October 23, 2026 07:55 pm IST
