India’s retail inflation rate (CPI) fell sharply to 0.25% year-on-year in October 2025, marking the lowest level on record, according to data released by the Ministry of Statistics and Programme Implementation (MOSPI) on Wednesday.
The decline comes amid reduced food prices and recent GST rate cuts, which together have eased cost pressures across essential and consumer goods categories.
Inflation Hits Record Low
The latest data shows that retail inflation — measured by the Consumer Price Index (CPI) — dropped from 0.8% in September to 0.25% in October, continuing a downward trend seen over the last four months.
This is the lowest inflation reading since 2012, when India adopted the current CPI-based inflation tracking system. The sharp fall reflects subdued price movements across key sectors, particularly food and beverages, fuel, and transportation.
Food Prices Drive Cooling Trend
The food inflation component, which makes up nearly half of the CPI basket, fell significantly due to lower prices of vegetables, cereals, and edible oils.
Vegetable prices declined 8.7% month-on-month, while cereals and pulses saw only marginal increases. Edible oil prices also dropped due to global oversupply and reduced import duties.
“The continued moderation in food inflation indicates improved supply conditions and the impact of good monsoon performance,” a senior government official said.
Analysts noted that reduced logistics costs and easing commodity prices globally also played a role in containing food-driven inflationary pressures.
Impact of GST Rate Cuts
Recent GST (Goods and Services Tax) rate revisions on essential commodities, including packaged foods, household items, and daily-use products, further contributed to the fall in headline inflation.
The government’s efforts to rationalize indirect taxes under the GST Council have translated into lower consumer prices across several categories, including FMCG and services.
Economists believe that the combined effect of GST cuts and seasonal supply surpluses helped anchor prices, particularly in rural markets.
Core Inflation Also Softens
The core inflation — which excludes volatile food and fuel prices — eased to 2.1% in October, its lowest in over four years. This indicates a broad-based decline in consumer price pressures across goods and services.
Sub-categories such as housing, clothing, transport, and healthcare recorded only mild price growth, suggesting steady domestic demand amid stable input costs.
Monetary Policy Implications
The record-low inflation gives the Reserve Bank of India (RBI) more room to maneuver on interest rates, though policymakers are expected to proceed cautiously.
With retail inflation well below the RBI’s medium-term target of 4% (+/-2%), analysts expect the central bank to maintain its accommodative stance, potentially supporting economic growth through liquidity measures.
“Such a sharp dip in CPI inflation is positive for macroeconomic stability. It reinforces India’s position as one of the few emerging markets with controlled price levels,” said a report from ICRA Economics.
Sector-Wise Breakdown (YoY Change)
| Category | Inflation Rate (%) |
|---|---|
| Food & Beverages | 0.3 |
| Fuel & Light | -1.1 |
| Clothing & Footwear | 1.8 |
| Housing | 2.2 |
| Miscellaneous Services | 1.5 |
| Headline CPI (Overall) | 0.25 |
Outlook
Experts warn that while the latest figures are encouraging, volatility in global oil prices and climate-related risks to agriculture could still pose inflationary challenges in the coming months.
However, the current trajectory indicates that price stability may persist through the next quarter, supported by a strong rupee, adequate food stocks, and stable supply chains.
The government is also expected to retain GST rate rationalization as part of its medium-term fiscal strategy to maintain consumer affordability.
Conclusion
India’s retail inflation falling to 0.25% reflects a remarkable stabilization in consumer prices, driven by government policy measures and easing supply-side pressures.
With food prices cooling and tax relief cushioning household expenses, the latest data signals strong macroeconomic fundamentals and room for growth-supportive policies ahead.
If the downward trend sustains, India could see its longest low-inflation phase in a decade, boosting consumer confidence and investment sentiment across sectors.
FAQs
Q1. What is India’s current retail inflation rate?
A: Retail inflation (CPI) stood at 0.25% year-on-year in October 2025.
Q2. What caused the drop in inflation?
A: Declining food prices, GST rate cuts, and stable global commodities.
Q3. Which sector saw the largest decline in prices?
A: Vegetables and edible oils recorded the steepest price falls.
Q4. What does this mean for the RBI’s policy?
A: The RBI may continue with an accommodative stance due to low inflation.
Q5. How does this impact consumers?
A: Lower inflation means reduced cost of essentials and better purchasing power.
Published on : 12th November
Published by : SMITA
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Source Credit : Reported by Shubhayan Bhattacharya | NDTV | Economy & Finance Desk