India RBI October 2026: cut to 6.25% as food inflation finally eases
The Reserve Bank of India cut the repo rate by 25bp to 6.25% at its October 2026 meeting — the first cut since early 2024 — after a run of vegetable-driven CPI spikes finally gave way to monsoon-normalised food prices. But core inflation at 4.0% still constrains the MPC's room to move.
Frequently asked questions
What is India's inflation target?
The Reserve Bank of India operates a flexible inflation targeting framework with a target of 4% CPI, with an upper tolerance band of 6% and lower band of 2%. If inflation remains outside the 2–6% band for three consecutive quarters, the MPC must explain the deviation to the government in a formal report. This structure — similar to the Bank of England's remit — gives the MPC operational independence within a democratically accountable framework.
How does food inflation affect India's CPI so much more than the US or UK?
Food has a basket weight of approximately 45–46% in India's CPI, compared to roughly 13% in the US CPI and 12% in UK CPI. This reflects the higher share of household spending on food in lower-income economies. The implication is that a 10% spike in vegetable prices adds ~1.0–1.5 percentage points to Indian CPI, where the same spike would add only ~0.3 pts in the US. This is why Indian CPI is much more volatile and why the RBI monitors food prices so closely.
Sources
- 01 Reserve Bank of India — MPC resolution October 2026 Oct 2026
- 02 MOSPI — CPI Press Release September 2026 Oct 2026
This story reports official statistics as published. It is reference information, not financial advice or a forecast.