Daijiworld Media Network - New Delhi
New Delhi, Sep 15: India may require a calibrated monetary policy response to handle surging inflation, with the October and December meetings of the Reserve Bank of India’s Monetary Policy Committee (MPC) presenting an ideal window for two successive 25-basis-point rate hikes, according to an SBI report released on Tuesday.
The State Bank of India's latest Ecowrap report noted that retail inflation, based on the Consumer Price Index (CPI), accelerated to 4.82 per cent in August 2026 from 4.45 per cent in July, pushed by broad-based increases across nearly all categories. Rural inflation stood considerably higher at 5.23 per cent, contrasted with 4.31 per cent in urban regions.
Food inflation also moved up to 5.66 per cent in August, primarily driven by elevated prices of essentials like onions, ginger, and garlic. Concurrently, core inflation—excluding food, fuel, household, and transport components—edged up to 4.16 per cent from 3.87 per cent in July.
Data analysis through August indicates that price pressures are turning increasingly generalised. While just 22 commodities accounted for 90 per cent of the weighted contribution to CPI inflation in January 2026, that number expanded to 51 commodities by August.
Furthermore, the contribution of the top 25 commodities (excluding gold and silver) dropped sharply from 83 per cent in January to 62 per cent in August, signaling that price increases are no longer isolated to a narrow basket of goods.
“Going forward, we believe CPI inflation may cross the 6.5 per cent mark before dropping to less than 6 per cent in early 2027,” the report stated, adding that the October and December MPC gatherings provide a “perfect pitch” for nuanced rate hike actions of 25 basis points each, followed by a strategic pause to evaluate incoming data.
The inflation trajectory is further complicated by volatile global energy trends. The ongoing West Asia conflict, which has widened in both depth and breadth, threatens to keep crude oil prices above $100 per barrel in the near term while amplifying market volatility.