Weekly Economic Policy Watch: Retail Inflation, Forex Reserves and Bank Deposits Under Spotlight

India’s economic calendar is set to witness several important data releases this week, with retail inflation, foreign exchange reserves and banking sector deposit growth expected to attract considerable attention from policymakers, investors and financial markets. These indicators will provide fresh insights into the country's inflation trajectory, external financial position and banking system liquidity.

The government is scheduled to release retail inflation figures for October on November 12. The announcement comes after consumer inflation increased to 5.54 per cent in September, compared with 4.83 per cent in August, according to provisional data published by the Ministry of Statistics and Programme Implementation (MoSPI).

The September reading, calculated using the Consumer Price Index (CPI) with 2024 as the base year, was the highest recorded so far in 2026. Retail inflation has been rising consistently since January, when it stood at 2.74 per cent, indicating a gradual increase in price pressures across the economy. Higher food prices were largely responsible for the latest acceleration. Food inflation, measured through the Consumer Food Price Index (CFPI), climbed to 7.74 per cent in September from 5.97 per cent in August, marking an increase of 1.77 percentage points. During the same period, overall retail inflation rose by 71 basis points. The October figures will therefore be closely monitored to determine whether persistent food price pressures have continued to affect household expenses and purchasing power.

Another significant development on the economic calendar will be the Reserve Bank of India's (RBI) foreign exchange reserves announcement on November 13. The central bank is expected to publish data covering the week ended November 6, providing an update on the country's foreign currency holdings. According to the latest available RBI figures, India's foreign exchange reserves declined by $2.691 billion to $717.056 billion in the week ended October 30. This followed a reduction of $1.269 billion in the previous week, when reserves fell to $719.748 billion. The consecutive declines have drawn attention to the movement of foreign currency assets and the central bank's efforts to manage exchange rate fluctuations.

India's forex reserves had reached a historic peak of $785.706 billion in the week ended September 4. The record level was supported by substantial foreign currency inflows through a special concessional swap facility linked to deposits from the Indian diaspora. Banks reportedly mobilised a record $133 billion through these deposits.

Reserves have declined since reaching that high. Experts have partly attributed the reduction to the utilisation of funds raised through Foreign Currency Non-Resident (Bank), commonly known as FCNR(B), deposits, along with dollar sales by the RBI to support the Indian rupee and manage volatility in the foreign exchange market. Foreign currency assets, which form the largest component of India's forex reserves, fell by $2.088 billion to $591.118 billion in the week ended October 30.

The latest reserve figures will be important in assessing the country's external financial strength, particularly amid currency market movements and changing global economic conditions. Bank deposit growth will be another area of focus on November 13, when fresh figures are expected to offer an indication of savings mobilisation and liquidity conditions across the banking sector. Recent data suggest that deposit growth has moderated, slowing to 16.7 per cent in the fortnight ended October 16 from 17.8 per cent recorded two weeks earlier.

Historical data show that India's average deposit growth stood at 14.71 per cent between 1998 and 2026. The growth rate reached its highest level of 29.3 per cent in January 2008, while the lowest reading was 2.7 per cent in December 2017. The upcoming release will help determine whether the recent slowdown in deposit mobilisation has continued or whether banks are witnessing an improvement in the flow of funds.

Taken together, the three economic releases will provide an important assessment of India's financial and economic conditions. Retail inflation will offer clues about the cost-of-living pressures facing households, while forex reserves will shed light on the country's external financial position and currency management. Deposit growth, meanwhile, will help gauge the strength of savings inflows and the availability of funds within the banking system. With all three indicators scheduled for release over November 12 and 13, the coming days are expected to be significant for market participants tracking India's economic outlook and financial stability.

Disclaimer: This image is taken from Business Standard.