Recent CPI data and RBI projections underpin the overwhelming market-implied odds for India’s annual inflation averaging 4.50% or higher in 2026. September 2026 headline inflation reached 5.54%, the highest in nearly two years, driven by food prices surging to 7.74% amid a deficient southwest monsoon, El Niño effects, and elevated global crude oil prices near $100 per barrel. The RBI’s October 2026 update lifted its FY27 (2026-27) CPI forecast to 5.2% from 5.0%, with quarterly averages projected near 5.8% over the next three periods and core inflation at 4.4%, prompting a 25-basis-point repo rate hike to 5.50%. Traders’ consensus aligns with these supply-side pressures and broadening price momentum, though a sharper-than-expected decline in food or energy costs could still moderate the outcome.