The Reserve Bank of India has failed to meet its price mandate as inflation surged to 7.41 per cent in September, which could result in further interest-rate hikes when the central bank meets for its next policy review in December or there could even be a surprise hike before that.

According to the legal mandate, the RBI is considered to have failed to meet its target if the average Consumer Price Index (CPI) remains outside the target range of 2 to 6 per cent for three consecutive quarters.

The CPI inflation averaged 6.3 per cent in January-March, 7.3 per cent in April-June, and now 7 per cent in July-September.

With inflation remaining above the 6 per cent level, the RBI now will have to give a report to the Centre giving reasons for failure to contain inflation at 4 per cent with a bias of 2 per cent on either side.

Official data released on Wednesday showed that the retail inflation based on the CPI was at 7.41 per cent in September.

It was at 7 per cent in August and 4.35 per cent in September 2021.

The rise in inflation in September was driven by food prices, with food inflation surging to 8.4 per cent from 7.62 per cent in August. September food inflation is the highest in 22 months.

Core inflation, excluding food and energy prices, was estimated by economists at 6.07per cent -6.1per cent in September.