Brace for impact: On rising inflation and external factors

India’s much-hyped domestic economic resilience is set to be tested over the next few months as external factors start to impose inescapable pressures. A case in point is inflation. The latest data on retail inflation show that it crossed the Reserve Bank of India’s 6% upper comfort limit in October 2026.

According to economists, this is likely to continue through the third quarter of this financial year, which means at least two more months of high inflation. Agricultural shortfalls brought on by a patchy and deficient monsoon have meant that food inflation rose sharply to 8.5% in October 2026. Elevated fuel prices meant that inflation in the transport category also rose sharply.

What is worse is that high inflation is spreading to almost every aspect of a household’s day-to-day needs. In fact, the latest Consumer Price Index (CPI) data show that 10 of the 12 major categories saw inflation in October, hitting their highest levels recorded in the new series of the index.