CPI expected around 6% in October amid food price pressures: Bank of Baroda

Consumer Price Index (CPI) is expected to settle at 6 per cent in October 2026, up from 5.54 per cent in September, with risks tilted to the upside, even as core inflation remains insulated to some extent by corporate absorption of input costs and softening gold rates, according to a research report by Bank of Baroda.

Consumer Price Index (CPI) is expected to settle at 6 per cent in October 2026, up from 5.54 per cent in September, with risks tilted to the upside, even as core inflation remains insulated to some extent by corporate absorption of input costs and softening gold rates, according to a research report by Bank of Baroda. The report noted that core inflation, which excludes food and fuel, is expected to settle between 4.6 per cent and 4.8 per cent, while abridged core inflation, which further excludes pan, tobacco, gold, silver, and precious metals, is projected to inch up into the 3.5 per cent to 3.7 per cent band.

"Consumer goods companies are limiting pass-through of higher input costs to consumers to support volume growth in an inflationary environment. This is likely to insulate core to some extent. Apart from this, downward correction in gold prices from a stickier dollar will further lend support to core inflation to some extent," the report stated. The report pointed out that primary risks to the headline consumer price index stem from an entrenched, broad-based firming up of food costs since July 2026, especially across edible oils, tomatoes, and pulses.

"Major risks to headline CPI emanate from food inflation which is seeing a broad-based trend since Jul’26. Especially inflation in edible oil, tomatoes, and pulses is getting entrenched. As per news reports, cattle feed cost on account of adverse weather conditions will further impact milk prices and also push prices of major protein-based items of consumption higher," the report said. The upcoming inflation print remains critical for the Reserve Bank of India, as the December 2026 monetary policy committee meeting will rely on it as the sole immediate inflation gauge to decide on interest rates.

Agricultural supply concerns add further pressure, with the report indicating that reservoir storage levels as of November 2, 2026, stood below the corresponding period of the previous year as well as below historical normal levels, posing challenges for Rabi sowing. "The reservoir status as on 2 Nov 2026 also shows that overall storage position is less than the corresponding period of last year in the country as a whole and is also less than the normal storage during the corresponding period. Hence, Rabi sowing also might face pressure," the report stated.

Tracking primary price movements, the Bank of Baroda Essential Commodities Index rose by 11.1 per cent year-on-year in October 2026, primarily driven by an unfavourable base, while sequentially picking up by 0.8 per cent. Out of 20 tracked commodities, 15 items witnessed an acceleration in inflation. The sharpest year-on-year surge appeared in onion prices, which rose by 99.6 per cent in October 2026 following a 51.2 per cent decline in October 2025. Significant increases also affected the oilseeds basket, tur and urad dal, milk, rice, and gur, while sugar provided relief with a sequential contraction of 4.5 per cent after two consecutive months of double-digit increases. (ANI)