Inflation in India Assignment Example: The Path of Inflation from 2000 to 2026
An economics assignment our team wrote in 2021, rebuilt on October 2026 data: India's inflation path since 2000, monthly CPI across the 2024 base change, the RBI's 4% target and its October rate rise, and the outlook. CPI inflation was 5.54% in September 2026 (provisional), up from a low of 0.25% in October 2025 on the old base.
This is an economics assignment our team wrote in 2021, a brief assessment of the path of inflation in India, rebuilt in October 2026 on current data. Every figure comes from its issuer: the Ministry of Statistics and Programme Implementation (MOSPI) for the consumer price index (CPI), the Reserve Bank of India (RBI) for the target and the repo rate, and the IMF for the long-run path. Our guide shows how to use a statistics-office series or a central-bank release as evidence.
What Did the Assignment Ask?
The task was a brief assessment of the path of inflation in India, written as a report. Our 2021 answer covered 2000 to 2020 with annual IMF data and then 2021 month by month; this rebuild runs the same four parts to September 2026. In our words, the brief asked for four things:
- Describe the long-run path of inflation in India, year by year since 2000.
- Show the latest year month by month.
- Explain the factors behind the latest trajectory, including monetary and fiscal policy.
- Give the outlook for inflation.
Where Does Inflation in India Stand in October 2026?
CPI inflation in India was 5.54% in September 2026, a provisional figure on the new 2024=100 base released by MOSPI on 12 October (MOSPI, 2026d). Food inflation was 7.74%. On 7 October the RBI raised the repo rate from 5.25% to 5.50% and changed its stance to "calibrated tightening" (RBI, 2026e).
Inflation in India at a glance, as at 12 October 2026
- CPI inflation, September 2026
- 5.54% Provisional; up from 4.83% in August
- Food inflation (CFPI), September 2026
- 7.74% Provisional; onion prices up 108.09% on a year earlier
- RBI repo rate
- 5.50% Raised by 0.25 points on 7 October 2026
- Inflation target
- 4% Band of 2% to 6%, renewed to March 2031
- RBI projection for 2026-27
- 5.2% The IMF's October 2026 WEO gives 5.0%
- Next MPC meeting
- 2–4 Dec 2026; the October CPI comes first, on 12 November
That is inside the 2% to 6% tolerance band but above the 4% target, and on the new series inflation has risen in every month of 2026. The parts below answer the brief in order, with a short section on the target after part 1.
Part 1: How Has Inflation in India Moved Since 2000?
On the IMF's October 2026 figures, inflation in India averaged about 4% from 2000-01 to 2005-06, peaked at 10.6% in 2009-10 and stayed between 8% and 10% until 2013-14. It fell to 3.4% by 2018-19, went above 6% in 2020-21 and 2022-23, dropped to 2.0% in 2025-26 and is projected at 5.0% for 2026-27 (IMF, 2026c).
Inflation in India, 2000 to 2027: IMF annual averages for years starting in April
Chart data
| Point | IMF annual average | IMF projection | 4% target |
|---|---|---|---|
| 2000 | 3.8% | — | — |
| 2001 | 4.4% | — | — |
| 2002 | 5% | — | — |
| 2003 | 4.1% | — | — |
| 2004 | 4% | — | — |
| 2005 | 3.7% | — | — |
| 2006 | 6.7% | — | — |
| 2007 | 5.9% | — | — |
| 2008 | 9.2% | — | — |
| 2009 | 10.6% | — | — |
| 2010 | 9.4% | — | — |
| 2011 | 8.1% | — | — |
| 2012 | 10% | — | — |
| 2013 | 9.8% | — | — |
| 2014 | 5.9% | — | — |
| 2015 | 4.9% | — | — |
| 2016 | 4.5% | — | 4% |
| 2017 | 3.6% | — | — |
| 2018 | 3.4% | — | — |
| 2019 | 4.8% | — | — |
| 2020 | 6.2% | — | — |
| 2021 | 5.5% | — | — |
| 2022 | 6.6% | — | — |
| 2023 | 5.4% | — | — |
| 2024 | 4.6% | — | — |
| 2025 | 2% | 2% | — |
| 2026 | — | 5% | — |
| 2027 | — | 4.4% | — |
| 2030 | — | — | 4% |
The IMF's India years run April to March, so its 2009 is the year to March 2010. Its Statistical Appendix records India's latest actual CPI year as "2025/26" (IMF, 2026b), and the figures match that basis: MOSPI's index averaged over April 2023 to March 2024 gives 5.4%, the IMF's figure for 2023, where the calendar year gives 5.7% (our check on MOSPI, 2026a, Annexure VI).
Averaged over the ten years from 2016-17, the IMF's figures give 4.7%; over the ten years before, just over 8% (our averages). The fall began before the 2016 law but not before inflation targeting: in January 2014 the RBI set a glide path to bring CPI inflation below 8% by January 2015 and below 6% by January 2016, and on 20 February 2015 it signed an agreement with the government that set 4% for the years from 2016-17. Between June 2014 and January 2015 the price of India's crude oil basket also fell by about 57% (RBI, 2015), so the framework shares the credit with oil.
Food and energy drive most of the swings. In a study of Indian inflation since 1994, Ball, Chari and Mishra (2016) find that headline inflation is more volatile than core inflation mainly because of large relative-price shocks in food and energy, with some evidence that these shocks pass into expected and future core inflation. Food and beverages also carry the largest weight in the basket: 45.86% in the 2012 series and 40.10% in the 2024 series, both measured on the 2012 groups (MOSPI, 2026c). That weight is why a poor harvest moves the headline rate so far.
What Is India's Inflation Target?
India's inflation target is 4% CPI inflation, with a tolerance band from 2% to 6%. The government sets it every five years in consultation with the RBI under section 45ZA of the RBI Act, 1934, and on 25 March 2026 it renewed the same target for 1 April 2026 to 31 March 2031 (Ministry of Finance, 2026a).
India's inflation-targeting timeline, 2014 to 2026
- 2014 and 2015: CPI glide path, then framework agreement January 2014: below 8% by January 2015 and below 6% by January 2016; 20 February 2015: agreement with the government setting 4% for the years from 2016-17 (RBI Annual Report 2014-15).
- 2016: Inflation target notified May 2016: RBI Act amended for flexible inflation targeting; 5 August 2016: 4% CPI target with a 2% to 6% band, to March 2021 (RBI).
- 2020: Pandemic spike CPI inflation above 6% in eight of the ten months published for 2020, peaking at 7.61% in October; April and May were not compiled (MOSPI).
- 2021: Target kept for 2021 to 2026 31 March 2021: the government retains 4% and the band (RBI).
- 2022 and 2023: Repo raised from 4.00% to 6.50% 4 May 2022: rise to 4.40%; 8 February 2023: 6.50%. Inflation averaged above 6% in every quarter of 2022, and the MPC met on 3 November 2022 to draft its report under section 45ZN (RBI).
- 2025: Four cuts to 5.25% February, April, June and December 2025, as CPI inflation fell to 0.25% in October (RBI; MOSPI).
- February 2026: CPI rebased to 2024=100 12 February 2026: 358 weighted items, weights from the 2023-24 household spending survey (MOSPI).
- March 2026: Target renewed to March 2031 25 March 2026: notification S.O. 1580(E) (Gazette of India).
- October 2026: Repo raised to 5.50% 7 October 2026: stance changed to calibrated tightening (RBI).
Flexible inflation targeting has had a statutory basis since the RBI Act was amended in May 2016, and a six-member Monetary Policy Committee (MPC) sets the repo rate to meet the target (RBI, n.d.). The test of failure is precise: average inflation above 6%, or below 2%, for any three consecutive quarters. The RBI must then report to the government with the reasons, the remedial action it proposes and the time it expects to need.
In 2022 the test was triggered. On our averages of MOSPI's monthly rates, inflation ran at 6.3%, 7.3% and 7.0% in the first three quarters of that year, and the MPC held a separate meeting on 3 November 2022 to draft its report to the government (RBI, 2022b). The 2025 low stopped one quarter short of the lower edge of the test: 1.7% for July to September and 0.8% for October to December, then 3.1% for January to March 2026 on the new series (MOSPI, 2026a; MOSPI, 2026d).
Part 2: How Did Monthly Inflation Move in 2025 and 2026?
Monthly CPI inflation fell through 2025, from 4.26% in January to 0.25% in October, and has risen in every month of 2026, from 2.74% in January to a provisional 5.54% in September. The two years are measured on different CPI bases (2012=100 and 2024=100), so the chart draws them as two lines, not one (MOSPI, 2026a; MOSPI, 2026d).
Monthly CPI inflation in India, 2025 and 2026, year on year
Chart data
| Point (%) | 2025, CPI 2012=100 | 2026, CPI 2024=100 |
|---|---|---|
| Jan | 4.26% | 2.74% |
| Feb | 3.61% | 3.21% |
| Mar | 3.34% | 3.4% |
| Apr | 3.16% | 3.48% |
| May | 2.82% | 3.93% |
| Jun | 2.1% | 4.38% |
| Jul | 1.61% | 4.45% |
| Aug | 2.07% | 4.83% |
| Sep | 1.44% | 5.54% |
| Oct | 0.25% | — |
| Nov | 0.71% | — |
| Dec | 1.33% | — |
October 2025's 0.25% was, in the RBI's words, "an all time low", led by a correction in food prices (RBI, 2025f). Inflation crossed the 4% target in June 2026, at 4.38%, and has stayed above it. July to September 2026 averaged 4.9% (our average, with September still provisional), in line with the RBI's projection for the quarter.
What Changed When the CPI Base Moved to 2024?
On 12 February 2026 MOSPI replaced the 2012=100 index with a 2024=100 series. Its weights come from the Household Consumption Expenditure Survey 2023-24, weighted items rose from 299 to 358, the basket follows the UN's COICOP 2018 classification, rural house rent is priced for the first time, and online prices are collected in 12 large towns (MOSPI, 2026b; MOSPI, 2026c).
The two series are linked only at the general index, through a linking factor of 0.5267 for the combined CPI, computed over the 2025 overlap. In practice, compare 2026 months with each other, or with 2025 on the new index, which MOSPI also publishes. Do not quote a run of rises that crosses January 2026. And do not set a 2026 division, such as food and beverages, against a 2012-base group: MOSPI says the classifications differ, which is why only the general index links.
Part 3: Why Did Inflation Fall in 2025 and Rise in 2026?
Food drove both moves. Food prices were lower than a year earlier in every month from June to December 2025, by 5.02% in October, and in 2026 they turned up with fuel: food inflation reached 7.74% in September (MOSPI, 2026a; MOSPI, 2026d). Behind the turn the RBI names a deficient monsoon, El Niño and volatile crude oil (RBI, 2026e).
The RBI gives the same reading. In August 2025 it put the fall down to "a sharp decline in food inflation led by improved agricultural activity and various supply side measures" (RBI, 2025d), and in October 2025 it expected the GST cuts to reduce "prices of several items in the CPI basket" (RBI, 2025e). In October 2026 it named "higher inflation in food and fuel groups", with spikes in sugar and onion (RBI, 2026e); MOSPI's September release has onion prices up 108.09% on a year earlier. Our 2021 version read India's inflation as cost-push from food and fuel supply; five years on, the RBI names the same two groups.
Not all of the rise is food. Restaurants and accommodation rose 9.36% in September, and the personal care and miscellaneous division rose 13.75%, the fastest of the twelve, with silver jewellery up 87.80% (MOSPI, 2026d). Core inflation, which excludes food and fuel, was 4.2% in August but 2.9% without precious metals, and the RBI sees "limited evidence of demand side pressures", though it flags strong growth in money and credit (RBI, 2026e). This is mainly a supply shock, which shapes the policy question below.
Part 3 also asks about fiscal policy. The central government budgeted a deficit of 4.3% of GDP for 2026-27, down from an estimated 4.4% in 2025-26 (Ministry of Finance, 2026b): a small consolidation, so the Budget is not adding demand while prices rise. In 2025 fiscal policy bore on prices directly, through the GST rate cuts.
Part 3: Why Did the RBI Raise Rates in October 2026?
The MPC raised the repo rate to 5.50% on 7 October 2026 because it expects headline inflation to average "almost 5.8 per cent in the next three quarters" and core inflation 4.4% in 2026-27. It saw "some evidence of elevated inflation expectations and generalisation of inflation" and judged that "recalibrating the policy rate is imperative" (RBI, 2026e).
The vote on the rate was unanimous; two of the six members wanted the stance kept at neutral. The RBI says the new stance means rate cuts are "off the table in the near term" and that the next move "can only be a rate hike or a pause". Each date in the table links to its resolution.
| MPC decision | Change (points) | Repo rate | Stance | Vote on the rate |
|---|---|---|---|---|
| 7 February 2025 | −0.25 | 6.25% | Neutral | Unanimous |
| 9 April 2025 | −0.25 | 6.00% | Accommodative | Unanimous |
| 6 June 2025 | −0.50 | 5.50% | Neutral | Five to one (one member for −0.25) |
| 6 August 2025 | Hold | 5.50% | Neutral | Unanimous |
| 1 October 2025 | Hold | 5.50% | Neutral | Unanimous |
| 5 December 2025 | −0.25 | 5.25% | Neutral | Unanimous |
| 6 February 2026 | Hold | 5.25% | Neutral | Unanimous |
| 8 April 2026 | Hold | 5.25% | Neutral | Unanimous |
| 5 June 2026 | Hold | 5.25% | Neutral | Unanimous |
| 5 August 2026 | Hold | 5.25% | Neutral | Unanimous |
| 7 October 2026 | +0.25 | 5.50% | Calibrated tightening | Unanimous (stance four to two) |
Set against 2025, the October rise reverses one quarter-point of the 1.25 points cut as inflation fell from 4.26% to 0.25%. In real terms the repo rate is now about zero, 5.50% against September's 5.54%, and below zero against the 5.8% the RBI expects for the next three quarters (our calculation, by the Fisher relation our investment appraisal example uses to read real yields). A student can argue from that gap that further rises are possible.
Part 4: What Is the Outlook for Inflation in India?
The RBI projects CPI inflation of 5.2% for 2026-27, with 6.0% in October to December, 5.7% in January to March and 5.6% in April to June 2027. The IMF's October 2026 World Economic Outlook gives 5.0% for 2026-27 and 4.4% for 2027-28. Both use April to March years, and neither is our forecast (RBI, 2026e; IMF, 2026c).
The two differ by 0.2 points for 2026-27 and both project a sharp rise from the 2025-26 low; the IMF's tables use information available to 30 September 2026, before the RBI's October projections and the September CPI. The RBI's 6.0% for October to December sits on the top edge of the band, but the failure test needs an average above 6% for three quarters running, and none of the RBI's projected quarters exceeds 6%. The RBI names the pressures behind its path: the deficient monsoon, El Niño, and high energy and commodity prices whose pass-through "is still continuing"; it calls the risks around its April to June 2027 figure evenly balanced (RBI, 2026e). Further out, the IMF has inflation back at 4.0% from 2029-30, on its assumption that India's "monetary policy projections are consistent with achieving the Reserve Bank of India’s inflation target over the medium term" (IMF, 2026b). A higher inflation rate than India's trading partners also bears on the rupee, the link our essay on purchasing power parity tests.
These figures are as at MOSPI's release of 12 October 2026, the MPC resolution of 7 October 2026 and the IMF's World Economic Outlook of 13 October 2026. The next documents to check are the October CPI on 12 November and the MPC decision on 4 December 2026.
How Would a Marker Grade This Assessment?
A marker credits handling the data correctly and arguing from it: every figure dated and sourced, its base and year stated, and a judgement on policy at the end. Describing a chart earns little; explaining why the line moved earns the marks.
- Name the vintage. IMF figures are revised between editions: our 2021 version, citing that year's IMF data, put the 2009 peak at 12.31%, and the October 2026 edition gives 10.6% (IMF, 2026c).
- State the basis. Say whether a year runs April to March or January to December: for 2025 MOSPI's rates average 2.1% one way and 2.2% the other (our averages).
- Flag provisional data. MOSPI first put August 2026 at 4.82% (MOSPI, 2026e), then revised it to 4.83%; September's 5.54% may move too.
- Go to the issuer. Our 2021 version cited a data aggregator; the issuer's release carries the base, the revisions and the next release date. How to reference an RBI report or a Census of India table in Harvard and APA is shown in our guide to referencing Indian sources.
- Separate the shock from the response. Monetary policy cannot grow onions. The RBI's case for a rise rests on second-round effects, "inflation expectations and firm level pricing behaviour", not on the shock itself.
Then test the forecast. Our 2021 version expected about 5.3% inflation the following year; the IMF now records 6.6% for 2022-23, and the 2022 overshoot led to the MPC's report to the government. Name the forecaster, the date and the risks, as the outlook above does.
Need help with an economics assignment on inflation, monetary policy or a country's macro data? Send us your brief and deadline on WhatsApp. Our economics essay and assignment help covers data-led questions like this one, and more worked answers are in our business and economics samples.
Sources
All sources accessed 14 October 2026. Checked the same day for later documents: MOSPI's latest CPI release was that of 12 October 2026, the RBI's latest MPC resolution that of 7 October 2026 and the IMF's latest World Economic Outlook that of 13 October 2026.
- Ball, L., Chari, A. and Mishra, P. (2016) Understanding Inflation in India. NBER Working Paper 22948. nber.org. Accessed 14 October 2026.
- International Monetary Fund (2026a) World Economic Outlook, October 2026: Resilience Under Strain, Urgent Choices, 13 October 2026. imf.org. Accessed 14 October 2026.
- International Monetary Fund (2026b) World Economic Outlook, October 2026: Online Statistical Appendix (data cut-off, Online Table G on key data documentation, and monetary policy assumptions) and Table A7, Emerging Market and Developing Economies: Consumer Prices. Statistical Appendix; Tables A. Accessed 14 October 2026.
- International Monetary Fund (2026c) DataMapper: inflation rate, average consumer prices (PCPIPCH), India, source World Economic Outlook (October 2026). imf.org. Accessed 14 October 2026.
- Ministry of Finance, Department of Economic Affairs (2026a) Notification S.O. 1580(E): inflation target for 1 April 2026 to 31 March 2031. The Gazette of India, Extraordinary, 25 March 2026. egazette.gov.in. Accessed 14 October 2026.
- Ministry of Finance (2026b) Budget 2026-2027: Speech of the Minister of Finance, 1 February 2026, paragraphs 92 to 97. indiabudget.gov.in. Accessed 14 October 2026.
- Ministry of Statistics and Programme Implementation (MOSPI) (2026a) Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and Combined for the Month of December, 2025, 12 January 2026, Annexures VI and VII (monthly index since 2013 and inflation since 2014). pib.gov.in. Accessed 14 October 2026.
- Ministry of Statistics and Programme Implementation (MOSPI) (2026b) First Press Release of Consumer Price Index on Base 2024=100, 12 February 2026, including December 2025 final figures and the technical note on the base revision. mospi.gov.in. Accessed 14 October 2026.
- Ministry of Statistics and Programme Implementation (MOSPI) (2026c) Frequently Asked Questions (FAQs) on CPI 2024 Series (Annexure V). mospi.gov.in. Accessed 14 October 2026.
- Ministry of Statistics and Programme Implementation (MOSPI) (2026d) Press Release of Consumer Price Index on Base 2024=100 for September, 2026, 12 October 2026, Annexures I, II and IV. mospi.gov.in. Accessed 14 October 2026.
- Ministry of Statistics and Programme Implementation (MOSPI) (2026e) Press Release of Consumer Price Index on Base 2024=100 for August, 2026, 14 September 2026 (August provisional). mospi.gov.in. Accessed 14 October 2026.
- Reserve Bank of India (2015) Annual Report 2014-15, chapter III: Monetary Policy Operations, 27 August 2015. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (n.d.) Monetary Policy: overview (the monetary policy framework, inflation target notifications and failure to maintain the target). rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2022a) Monetary Policy Statement, 2022-23: Resolution of the Monetary Policy Committee, May 2 and 4, 2022. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2022b) Meeting of the Monetary Policy Committee, November 3, 2022. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2023) Monetary Policy Statement, 2022-23: Resolution of the Monetary Policy Committee, February 6-8, 2023. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2025a) Resolution of the Monetary Policy Committee, February 5 to 7, 2025. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2025b) Resolution of the Monetary Policy Committee, April 7 to 9, 2025. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2025c) Resolution of the Monetary Policy Committee, June 4 to 6, 2025. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2025d) Resolution of the Monetary Policy Committee, August 4 to 6, 2025. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2025e) Resolution of the Monetary Policy Committee, September 29 to October 1, 2025. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2025f) Resolution of the Monetary Policy Committee, December 3 to 5, 2025. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2026a) Resolution of the Monetary Policy Committee, February 4 to 6, 2026. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2026b) Resolution of the Monetary Policy Committee, April 6 to 8, 2026. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2026c) Resolution of the Monetary Policy Committee, June 3 to 5, 2026. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2026d) Resolution of the Monetary Policy Committee, August 3 to 5, 2026. rbi.org.in. Accessed 14 October 2026.
- Reserve Bank of India (2026e) Monetary Policy Statement, 2026-27: Resolution of the Monetary Policy Committee, October 5 to 7, 2026. rbi.org.in. Accessed 14 October 2026.
Frequently Asked Questions
What is the RBI's inflation target?
The target is 4% CPI inflation, with a tolerance band of 2% to 6%. The government sets it every five years in consultation with the RBI, and on 25 March 2026 it kept the same target for April 2026 to March 2031. If average inflation stays above 6% or below 2% for three consecutive quarters, the RBI must explain why to the government. The target section above sets out the 2022 case.
What is India's inflation rate now?
CPI inflation was 5.54% in September 2026, a provisional figure on the 2024=100 base released by MOSPI on 12 October 2026. Food inflation was 7.74%. The October figure is due on 12 November 2026, and the RBI's Monetary Policy Committee next meets from 2 to 4 December. The monthly chart in part 2 shows the path through 2025 and 2026.
Why was inflation in India so low in 2025?
Mainly because food prices fell. Food inflation turned negative in June 2025 and reached −5.02% in October, when headline CPI inflation fell to 0.25%, a level the RBI called an all-time low. The RBI credited better harvests and supply measures, and expected the GST rate cuts to lower other prices. Part 3 compares those causes with the food and fuel rise of 2026.
What changed in the CPI 2024 series?
MOSPI moved the CPI to a 2024=100 base on 12 February 2026, with weights from the Household Consumption Expenditure Survey 2023-24, 358 weighted items instead of 299, the COICOP 2018 classification and rural house rent priced for the first time. The two series differ in basket, weights and classification, so MOSPI links them only at the general index; quote 2026 rates on the new base and never run a streak of rises across January 2026. The base-change section in part 2 explains how to cite both.
Are the IMF's India inflation figures for calendar or fiscal years?
Fiscal years. The October 2026 World Economic Outlook records India's latest actual CPI year as 2025/26, and its figures match that basis: its 5.4% for 2023 is the April 2023 to March 2024 average of MOSPI's index, where calendar 2023 gives 5.7%. So the IMF's 2.0% for 2025 covers April 2025 to March 2026. Label every IMF figure with its fiscal year, as the long-run chart in part 1 does.
