The Reserve Bank of India raised its repurchase rate for the first time since February 2023 on Wednesday as inflation pressures and agriculture risks from a stronger El Niño and a weaker southwest monsoon loom, the country's central bank said Wednesday.

India's benchmark rate rose by 25 basis points to 5.50% from 5.25%, in line with the market consensus forecast tracked by Investing.com.

The Monetary Policy Committee, led by Governor Sanjay Malhotra, voted four-to-two to change its policy stance. Board members Nagesh Kumar and Ram Singh voted to keep the monetary policy neutral.

The higher rate comes as consumer price inflation rose to 4.8% in August from 4.5% in July due to an increase in food and fuel prices. Headline inflation is also seen to average 5.8% over the following three quarters, while core inflation grew to 4.2%.

Economists at ING Think expect rising oil and an acceleration in food prices to push inflation back above the RBI's target range in the fourth quarter.

A weaker southwest monsoon and the looming El Niño triggered price increases, especially with sugar and onions, the RBI said.

Policymakers had enough room to increase rates on the heels of a stronger-than-expected real gross domestic product growth of 7.8% in the first quarter despite "challenging" geopolitical developments.