CPI inflation likely to peak at 6.7%-6.8% in November: Report

New Delhi: India's CPI inflation is likely to peak at 6.7 percent to 6.8 percent in November, an Ecowrap report from the State Bank of India’s Economic Research Department has said.

"India's CPI inflation has recently firmed up, rising to 5.54 percent in September 2026, compared with 4.82 percent in August, marking the highest reading under the revised CPI series. The increase is driven largely by sharply higher food prices, with food inflation climbing to 7.74 percent and essentials like onions, garlic, and lemons recording steep jumps," said Ecowrap report.

Rural areas face higher inflationary pressures at 6.08 percent compared to urban centers at 4.88 percent.

However, the report said that overall inflation trajectory is vulnerable to significant upward risks from a deficient monsoon, persistent El Niño effects, and elevated commodity and energy prices, all of which could perpetuate supply-side constraints.

The persistence of inflation generalisation, reflected in the increase in the number of commodities accounting for 75 percent of CPI’s weighted contribution from 25 in August’26 to 31 in September’26, suggests that price pressures are becoming more diffused across the consumption basket rather than being concentrated in a few items.

"Against this backdrop, alongside persistent rupee weakness, we believe that the peak policy rate could reach 6.0 percent, necessitating a calibrated but firm monetary policy response to contain inflation and anchor expectations," said Ecowrap report.

The report added that the RBI could consider couple of options like adopting a calibrated tightening approach by raising the MSF rate in the interregnum by 25 bps from 5.75 percent to 6 percent. The central bank may also raise repo by 25 bps in December which will ultimately lead to a MSF rate at 6.25 percent.

Secondly, the report added that RBI could opt for a more decisive 50 bps hike in the repo rate in December policy signaling a stronger commitment to containing inflationary pressures.

"The choice between the two options would depend on the persistence of inflation and the trajectory of the rupee going forward. Going forward, the RBI’s policy response will depend on the persistence of underlying price pressures, the evolution of food and energy prices, and the trajectory of the rupee, with the key priority being to prevent temporary supply-side shocks from translating into broader and more persistent inflationary pressures," the report added.

Globally, the FAO Food Price Index increased by 5.8 percent Y-o-Y in September, reflecting an uptick in international food commodity prices. According to the FAO research, rice yields during El Niño episodes are typically 1.0-1.5 percent below their expected trend, while wheat and maize yields generally remain near normal levels. Stronger El Niño events are associated with more predictable yield outcomes, though not necessarily more severe declines, whereas weaker events tend to result in greater variability in yield performance.

"We expect Q3 CPI inflation would be around 6.5 percent and Q4 at 5.6 percent...and full year FY27 inflation average to be around 5.3 percent. The estimate largely depends upon pressures from supply side on account of the deficient monsoon, ongoing El Niño conditions and high energy and other commodity prices," said Ecowrap report.