RBI held its policy rate steady at 5.25% in August, arguing correctly that it needed greater clarity before acting. That clarity has been provided by subsequent data. With retail inflation well above the 4% target and on a rising trajectory, and with commodity price shocks beginning to filter more broadly through the economy, it's time for an interest rate hike at next week's meeting of the monetary policy committee. Food and fuel inflation remain the key underlying drivers. Food inflation has risen from about 2% y-o-y at the beginning of the year, to 6% in August. Fuel inflation has risen even more sharply over the same period, from a mere 0.2% to the current 5.2%. These are unsurprising developments in a country that ha historically transported about half of its crude oil and 90% of its LPG imports through the Strait of Hormuz.