Inflation targeting

In the news

• IMF lifts India's 2026-27 growth forecast to 7%, warns global risks tilt downward 14 October 2026 · The Hindu

  Why is the IMF upgrading India just as it says the world economy's resilience is under strain?

• Retail inflation rises to 5.54% in September as food prices jump; rural CPI crosses 6% 13 October 2026 · Indian Express

  Inflation is still inside the RBI's band nationally, so why has rural India already crossed the 6% red line?

• RBI raises repo rate to 5.5%, first hike since 2023, shifts to 'calibrated tightening' 8 October 2026 · The Hindu

  GDP grew 7.8% last quarter and inflation is inside the band. So why has the RBI started raising rates?

Key facts

• The IMF's October 2026 WEO raised India's 2026-27 growth forecast to 7% from 6.4% (July) and projects 7% for 2027-28, up from 6.7%. (14 October 2026)
• The IMF projects India's CPI inflation at 5% in 2026-27 and 4.4% in 2027-28, and the current account deficit at 1.5% of GDP in 2026-27. (14 October 2026)
• All-India CPI inflation rose to 5.54% in September 2026 from 4.83% in August; rural inflation was 6.08% and urban 4.88% (MoSPI, released 12 October 2026). (13 October 2026)
• Food inflation (CFPI) rose to 7.74% from 5.97%; onion inflation was 108.09%. (13 October 2026)
• On 7 October 2026 the MPC unanimously raised the repo rate by 25 basis points to 5.5%, the first hike since February 2023. (8 October 2026)
• After the hike the SDF rate is 5.25%, and the MSF rate and Bank Rate are 5.75%. (8 October 2026)

Previous-year questions

1. 2024 · GS3 · 10 marks What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.
2. 2022 · GS2 · 15 marks Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss.
3. 2019 · GS3 · 10 marks Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.
4. 2020 · Prelims Consider the following statements: 1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI…
5. 2017 · Prelims Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is…
6. 2014 · Prelims With reference to Balance of Payments, which of the following constitutes/constitute the Current Account? 1. Balance of trade 2. Foreign assets 3. Balance of invisibles 4. Special Drawing Rights Select the correct…