India's retail inflation is expected to have climbed to about 6% in October, the top of the Reserve Bank of India's tolerance band, and two leading dairy brands are raising milk prices from Thursday, adding to pressure on a central bank that has already started tightening.

Bank of Baroda's economists expect the consumer price index to have risen 6% from a year earlier in October, up from 5.54% in September, with risks tilted to the upside, according to a research note reported by ANI on Monday. Market participants surveyed ahead of the release put the figure at 5.9%, Upstox reported. The official October data is due on Thursday, Nov. 12.

For investors across Asia, the print matters because it is the last inflation reading the RBI's Monetary Policy Committee will see before it meets on Dec. 2 to Dec. 4. The committee raised the repo rate by 25 basis points to 5.50% on Oct. 7 in a unanimous vote and switched its stance to "calibrated tightening," according to the policy statement as summarized by SCC Online. A number at or above 6% would strengthen the case for a second hike, Upstox said.

Milk prices rise in the flush season

Mother Dairy and Amul are set to raise milk prices by 2 to 6 rupees a liter from Nov. 12, ANI reported on Wednesday, citing industry sources. Toned milk will cost 2 rupees more, full cream milk 4 rupees more and full cream buffalo milk 6 rupees more.

In the Delhi capital region, packaged full cream milk will rise to 76 rupees a liter from 72 rupees, and buffalo full cream milk to 86 rupees from 80 rupees, according to the report. Mother Dairy's cow milk will go to 65 rupees from 62 rupees.

The timing is unusual. Milk prices tend to hold steady in the winter flush season, when output normally picks up. This year supply is tight. Milk fat prices have risen about 20% to 25% over the past few months and cattle feed has become more expensive, pushing dairies to pay farmers more, ANI reported. Amul has raised its fat-linked procurement rate to 1,000 rupees a kilogram, the sources said, which lets farmers earn more than 60 rupees a liter.

Bank of Baroda had already flagged the risk: its note said higher cattle feed costs caused by adverse weather would push up milk prices and other protein foods.

Onions double and food pressure spreads

The bank's economists said food inflation has been broad-based since July, with edible oil, tomatoes and pulses the most entrenched. "Major risks to headline CPI emanate from food inflation," the note said.

Its Essential Commodities Index, which tracks 20 everyday items, rose 11.1% from a year earlier in October and 0.8% from September. Fifteen of the 20 items showed faster inflation. Onion prices jumped 99.6% from a year earlier, partly because they had fallen 51.2% in October 2025. Oilseeds, tur and urad dal, milk, rice and gur also rose sharply. Sugar was the exception, falling 4.5% on the month after two months of double-digit gains.

The outlook for the winter crop adds to the concern. Reservoir storage on Nov. 2 was below both last year's level and the normal level for the period, Bank of Baroda said, which could weigh on rabi sowing.

Underlying inflation looks calmer. The bank expects core inflation, which strips out food and fuel, at 4.6% to 4.8% in October. Consumer goods companies are holding back on passing higher input costs to shoppers to protect sales volumes, and lower gold prices are also helping, the note said.

What the RBI is watching

The RBI's own forecasts already assume a jump. In October it projected consumer inflation of 6.0% for the October-December quarter, up from 4.9% in July-September, and 5.2% for the fiscal year ending March 2027, according to SCC Online.

Oil offers some relief. Brent crude for January delivery fell about 13% last week to around $98 a barrel, Upstox reported, which lowers India's import bill and eases fuel costs. Lower crude has also helped Indian government bonds, where the 10-year yield fell as oil eased.

That leaves food as the main swing factor. A reading above 6% would put inflation outside the RBI's tolerance band. The October data is due Thursday, and the first full month of the new milk prices will show up in November's figures, due in mid-December after the RBI has decided.