It's not food.

"India's retail inflation quickened to 5.54% in September 2026 from 4.83% in August, driven by a sharp rise in food prices, particularly vegetables, according to government data." "The central bank also raised its inflation forecast for FY27 to 5.2% from 5.0% earlier, citing higher crude oil prices, elevated food costs and the impact of weaker rupee on imported inflation." ET. Emphasis on food prices is a regular cop-out for doing nothing because food prices are supply dependent and monetary policy cannot increase supplies. The big secret is that the government is actively creating shortages of sugar and grains by diverting them for ethanol production to reduce import of crude oil. "Between 2019-20 and 2025-26, ethanol supplied to oil marketing companies grew at approximately 38% annually, while maize production grew at 11.4%, sugarcane at 5.1% and rice at 4.4%." Maize is essential for the poultry industry and diversion of maize to ethanol production is raising prices of eggs and chicken. "The same applies to livestock and diary producers." "The starch and food-processing industries face a similar problem." Indic Collective. As more land is diverted to sugar and maize production there is less for growing vegetables. The precipitous fall of the rupee from 62.33 to one dollar in 2014 (bankbazaar.com) to 96.795 to one dollar on 08 October (in.investing.com), makes imports that much more expensive. In a belated effort to be seen to be doing something the RBI raised the cost of borrowing by a token 25 basis points (bps) to 5.50% last week. TOI. Just as the RBI has failed to control inflation it has failed to control the cost of borrowing for the government. "Indian government bonds tumbled yesterday, with the benchmark 10-year yield posting the biggest one-day rise in over six months," as the "6.94% 2036 bond yield surged nearly 9 bps to 7.3857%, a three-year peak." ET. Clearly, the bond market has no faith in the RBI's ability to control inflation in the medium term. To support the rupee the RBI announced a dollar swap which drew in a total of $136.4 billion, of which FCNR(B) deposits at very high rates of tax-free interest contributed $127.2 billion. Mint. However, the rupee was at 95.11 to one dollar on 31 August, the closing day of the scheme, but continued falling to over 96 to the dollar. mumbaiport.gov.in. Foreign Exchange reserves fell from $785.71 billion on 4 September to $734.6 billion on 2 October, suggesting the RBI had spent about $50 billion on buying rupees to support the currency. BT. When that did not work, the RBI "announced a series of measures to ease pressure on the rupee, tightening rules for foreign exchange derivatives, restricted forward hedging of the currency and mandated that "authorised dealers will have to maintain a cash reserve with the RBI equal to 20% of the rupee equivalent of the notional amount of each eligible transaction." ET. The RBI "announced a special window to meet the entire daily dollar requirements of three public sector oil marketing companies (OMCs). NDTV. As the rupee appreciated to 95.755 on 12 October from 96.755 on 09 October, the RBI restricted the rupee non-deliverable forward window only for hedging. ET. The RBI probably wants to stop banks and companies buying dollars with the stronger rupee for use in the future. Large scale dollar buying will again weaken the rupee. "Prasanna Tantri, associate professor of finance at the Indian School of Business, has warned that India cannot sustain zero real interest rates for too long. He warned that the RBI's efforts to defend the rupee and keep interest rates artificially low through monetary easing risk fueling inflation and undermining financial stability." BT. The RBI failed to defy the 'Impossible Trinity' (wikipedia) and prefers to control the movement of currency while trying to keep the interest rate low and the rupee high. Will it succeed? Depends on foreign investors and the bond market. Stop blaming food. They are not buying it.