Predicting "transitory" inflation went wrong for some of the world's central bankers earlier this decade, but this might be a safer call for India – where a spike in food prices is reversing itself in real time.

CEIC's proprietary nowcast is forecasting that November inflation will slow to 5.2% from the 6.2% pace seen in October, according to the most recent reading. Our users get a timely edge, given that India won't report the official consumer price index figure until mid-December. Our machine learning-driven model is being heavily influenced by real-time commodity prices, including energy and food.

Food prices in India can be heavily affected by inclement weather at home, global supply chains and volatility in prices for key imported goods, such as edible oils. This can have an outsized effect on overall inflation, given that food and beverages have such a heavy weighting in the CPI (more than 45%). Excluding food, inflation stands at a more modest 3%.

CEIC also offers a high-frequency Food Price Index for India. Since mid-October, this daily, proprietary indicator has picked up real-time retail price easing for goods ranging from tomatoes to rice and milk. Our second chart shows how volatile food has been in the second half of this year (peaking twice at a 10% annualized inflation rate), and also demonstrates how our index leads official food inflation figures.

The two-month inflation spike from July's lows has led to some public hawkishness from the Reserve Bank of India, which wants to see a durable descent to its 4% inflation target before resuming its previous dovish stance. (The RBI's governor, Shaktikanta Das, recently pushed back on calls to cut food from the inflation target, given this segment's volatility; excluding almost half of the inflation basket would amount to "not having a target," he said.)

Still, the central bank has traditionally avoided significant interventions based on food-price fluctuations, given their supply-side nature. For example, high food prices in mid-2023 resulted in only modest inflation for non-food items. This time around, however, higher food prices might have seen greater spillover into other sectors.

The central bank's next meeting is on Dec. 6. We've compared food and non-food inflation to the RBI's target range in our final chart.

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