Diwali 2026: Retail Inflation Hits 5.54% in September, Forecast to Peak at 6.8%

India's retail inflation, measured by the Consumer Price Index (CPI), rose to 5.54% in September 2026, up from 4.83% in August 2026, according to the Ministry of Statistics and Programme Implementation (MoSPI). This marks its highest reading under the revised CPI series and the first time it has crossed the 5% mark. As households prepare for Diwali 2026, increased prices across several festive shopping categories could put pressure on budgets.

The CPI tracks price changes for a basket of goods and services regularly purchased by households. For instance, if a basket cost ₹1,000 in September 2025, the same basket would cost ₹1,055.40 in September 2026, reflecting a 5.54% increase. However, overall CPI inflation does not mean all products rise at the same rate, with individual categories varying.

Among items relevant to festive shopping, silver jewellery recorded the highest year-on-year inflation at 87.8% in September 2026, although this was a decrease from 107.11% in August 2026. This means an item costing ₹10,000 in September 2025 would be approximately ₹18,780 in September 2026. Food inflation also climbed significantly to 7.74% from 5.97%, impacting spending on groceries, cooking ingredients, and festive meals, with onions, garlic, and lemons seeing steep increases.

Inflation also increased across other categories including household utensils, clothing, furniture, appliances, and travel. In contrast, vehicle prices recorded negative inflation of 2.56% in September, indicating a lower price index compared to a year prior. This offers some relief for specific big-ticket purchases.

Looking ahead, SBI Research’s Ecowrap report projects that retail inflation could peak further, reaching 6.7%-6.8% in November 2026. If these projections hold, households could face additional budget pressure as Diwali approaches, particularly due to the significant impact of food prices on regular spending and seasonal purchases.

What to watch: Monitor food price trends and overall CPI figures closer to the Diwali festival.

Editor's note: The draft accurately synthesizes the economic data and projections provided in the source material without adding extraneous information.