Food Price Surge: October CPI Expected to Hit 6%
Bank of Baroda predicts October CPI inflation will hit 6% due to rising food costs, impacting RBI's upcoming interest rate decisions.
India's inflation landscape is facing fresh pressure as the October CPI inflation forecast points toward a significant rise. According to a recent research report by Bank of Baroda, the Consumer Price Index (CPI) is expected to settle at 6 per cent for October 2026, marking an increase from the 5.54 per cent recorded in September.
The Food Inflation Trigger
The primary driver behind this projected spike is a broad-based increase in food costs that has been gaining momentum since July 2026. The report highlights that inflation in essential items—specifically pulses, tomatoes, and edible oils—is becoming deeply entrenched.
Adding to the concern is the impact of adverse weather conditions. Reports suggest that the rising cost of cattle feed is expected to trigger a ripple effect, pushing up the prices of milk and other major protein-based consumption items.
Core Inflation: A Silver Lining?
While headline inflation is climbing, core inflation (which excludes volatile food and fuel prices) is expected to remain relatively stable, projected to settle between 4.6 per cent and 4.8 per cent. Abridged core inflation—which further removes precious metals like gold and silver, as well as pan and tobacco—is estimated to be in the 3.5 per cent to 3.7 per cent range.
Bank of Baroda attributes this insulation to two main factors:
- Corporate Absorption: Consumer goods companies are absorbing higher input costs rather than passing them on to customers, in an effort to maintain volume growth.
- Gold Price Correction: A downward correction in gold prices, influenced by a stickier dollar, is providing some relief to the core inflation figures.
The Essential Commodities Index Alarm
The Bank of Baroda Essential Commodities Index reveals a worrying trend, having risen by 11.1 per cent year-on-year in October 2026. Out of 20 commodities tracked, 15 showed an acceleration in inflation.
The most dramatic surge was seen in onion prices, which skyrocketed by 99.6 per cent year-on-year, following a sharp decline in October 2025. Other items experiencing significant price hikes include:
- Tur and Urad dal
- Oilseeds
- Milk and Rice
- Gur
Agricultural Risks and RBI's Dilemma
The outlook for the coming months remains clouded by agricultural supply concerns. As of November 2, 2026, reservoir storage levels were reported to be lower than both the previous year's levels and historical norms. This deficit poses a direct threat to Rabi sowing, which could further destabilize food prices.
These developments place the Reserve Bank of India (RBI) in a critical position. The upcoming inflation print will serve as the primary gauge for the Monetary Policy Committee during its December 2026 meeting, where the data will be pivotal in deciding whether to adjust interest rates.