India’s retail inflation drops to 0.25%, lowest since 2014,in October

India's retail inflation cooled sharply to a record low of 0.25 per cent in October 2025, marking the lowest level in the current Consumer Price Index (CPI) series with base year 2012, as per data released by the National Statistics Office (NSO) on Wednesday. The sharp moderation was driven by GST rate cuts on nearly 380 mass consumption items and easing prices of vegetables, fruits, eggs, and other essentials.In comparison, retail inflation stood at 1.44 per cent in September 2025 and 6.21 per cent in October 2024, indicating a significant decline over the year.
According to NSO, food inflation fell steeply to (-) 5.02 per cent in October, reflecting the combined impact of the full-month GST rate reduction, a favourable base effect, and price drops across categories such as oils and fats, vegetables, fruits, eggs, footwear, cereals, transport, and communication.The Reserve Bank of India (RBI), which targets CPI inflation at 4 per cent with a tolerance band of 2 per cent on either side, is likely to take comfort from the softening price trajectory. The revised GST rates came into effect from September 22, contributing to the October decline.The data also revealed a divergence between rural and urban inflation — rural areas recorded a negative inflation rate of (-) 0.25 per cent, while urban areas registered 0.88 per cent. Among states, Kerala reported the highest inflation at 8.56 per cent, followed by Jammu and Kashmir (2.95 per cent), Karnataka (2.34 per cent), Punjab (1.81 per cent), and Tamil Nadu (1.29 per cent). Several states, including Assam, Bihar, Chhattisgarh, Delhi, and Uttar Pradesh, recorded negative inflation.
Commenting on the data, Aditi Nayar, Chief Economist at ICRA, stated the RBI’s Monetary Policy Committee (MPC) may revise its FY2026 CPI inflation projection lower from 2.6 per cent, given the softening food prices and the impact of GST rate rationalisation.“This, along with the dovish tone of the October 2025 policy document, would support a 25-bps rate cut in the December 2025 policy review, unless Q2 FY2026 GDP growth surprises on the upside,” Nayar noted.Rajani Sinha, Chief Economist at CareEdge Ratings, added that moderating inflation provides the RBI with more flexibility to focus on supporting economic growth, especially amid global uncertainties and trade-related challenges.“If growth weakens in the second half of FY26, the latest inflation readings could create scope for a rate cut,” she said.Rajeev Sharan of Brickwork Ratings highlighted that the disinflationary trend indicates a broad-based easing across consumption categories and could have positive implications for businesses.“From a credit rating perspective, this disinflationary trend helps ease input cost pressures, supports corporate margins, and strengthens debt-servicing capacity,” Sharan said.The next meeting of the MPC is scheduled for December 3–5, 2025, where policymakers are expected to weigh the record-low inflation readings against growth dynamics before taking a call on interest rates.The NSO compiles CPI data from 1,181 villages and 1,114 urban markets across the country, making it a key barometer for assessing price movements and policy decisions.

(Business Correspondent)