India Inflation Falls to 8-Year Low in September

The annual inflation rate in India inched higher to 3.48% in April of 2026 from 3.4% in the previous month, marking the fastest inflation rate in one year, but coming in well below market expectations of 3.8%. It was the fourth reading under India’s new CPI series, which updated the weights of different goods in the index based on the Household Consumption Expenditure Survey conducted two fiscal years ago, increasing the share of non-food items in the domestic consumer basket. Food inflation jumped to 4.2% from 3.87%. Meanwhile, consumer prices refrained from increasing for a second month for transportation (-0.01% vs -0.05% in March) despite the increase in wholesale energy prices, as the surge in benchmarks due to the war in the Middle East and the weaker rupee lifted fuel costs. In turn, prices for accommodation rose slower (1.71% vs 2.88%). From the previous month, consumer prices rose by 0.27%.

The annual inflation rate in India rose to 3.4% in March of 2026 from 3.21% in the previous month to mark the largest inflation rate in over one year, despite coming below median market expectations of 3.48%. It was only the third reading in India's new CPI, which updated the weights of different goods within the index according to the Household Consumption Expenditure Survey from two fiscal years ago, increasing the weight of non-food goods int the domestic consumer basket. Food inflation was at 3.87%, picking up from the 3.47% in the previous month. In the meantime, inflation inched higher for restaurants and accommodation (2.88% vs 2.73% in February) and prices were unchanged for transportation (vs -0.05%), despite surges in wholesale global energy prices. From the previous month, Indian consumer prices rose by 0.26%.

India has reaffirmed its inflation-targeting framework, setting a 4% retail inflation goal with a tolerance band of 2–6% for the five years from April 2026 to March 2031. The decision, announced via a gazette notification by the Department of Economic Affairs in consultation with the Reserve Bank of India, maintains the existing policy structure. This marks the second consecutive extension of the framework, first introduced in 2016 and renewed in 2021. Under the flexible inflation targeting (FIT) regime, the six-member Monetary Policy Committee, led by the RBI Governor, is mandated to keep inflation around 4% while allowing room within the defined band. The move signals continuity in India’s monetary policy approach, providing stability and predictability for markets. Recent data showed retail inflation rising to 3.21% in February from 2.74% in the prior month.