India inflation jumps to 5.54% in Sept, strengthening case for further rate hikes

Business Recorder reported that India's retail inflation climbed to 5.54% in September, according to data released on Monday. The reading came in slightly above the 5.4% forecast in a Reuters poll and sits close to the upper limit of the central bank's tolerance range. It marks the fourth month running that the figure has exceeded the Reserve Bank of India's 4% medium-term goal.

Inflation rose from 4.83% in August, and part of the increase reflects base effects, since prices last year were lower. Food inflation jumped to 7.74% from 5.97%, with onion, ginger and garlic prices leading the gains, while transport inflation reached 5.01% compared with 4.6% a month earlier.

The Reserve Bank of India lifted its repo rate by 25 basis points to 5.5% last week, its first hike since February 2023. Governor Sanjay Malhotra projected average headline inflation near 5.8% over the next three quarters and raised the fiscal 2027 forecast to 5.2%, up from 5%. He also flagged that a weak monsoon and strong El Nino conditions could weigh on farm output and rural demand, though ample foodgrain stocks and government steps should help cushion the effect, while Brent crude has held above $100 a barrel.