Cooling Prices, Warming Hopes: India’s Inflation Hits Historic Low

Updated: November 13, 2025 02:12

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India’s retail inflation fell to a record low of 0.25% in October 2025, driven by falling food prices and GST rate cuts. This marks the lowest reading in the current CPI series, fuelling expectations of deeper monetary easing by the Reserve Bank of India as policymakers eye further rate cuts.

Inflation Slide Opens Door for RBI Policy Shift

India’s inflation trajectory has taken a dramatic turn, with retail inflation based on the Consumer Price Index (CPI) dropping to 0.25% in October 2025, according to data released by the Ministry of Statistics and Programme Implementation. This is the lowest year-on-year inflation recorded since the current CPI series began, underscoring a sharp disinflationary trend.

The decline was primarily driven by negative food inflation, with prices of vegetables, pulses, and cereals falling significantly. Food inflation dipped to -5%, while GST rate revisions introduced in September further eased consumer costs. Economists note that this sharp moderation has strengthened expectations of deeper rate cuts by the Reserve Bank of India (RBI), which has already implemented a 100 basis point reduction earlier this year.

While the fall in inflation offers relief to households, experts caution that this may represent the bottom of the current cycle, with prices likely to inch upward in coming months. Nevertheless, the benign inflation outlook provides the RBI with greater flexibility to support growth through accommodative monetary policy.

Notable Updates

•⁠ ⁠Historic Low: Retail inflation fell to 0.25% in October, down from 1.5% in September

•⁠ ⁠Food Deflation: Food prices dropped by 5.02% year-on-year, with vegetables plunging 27.57%

•⁠ ⁠GST Impact: Recent GST rate cuts contributed to the decline, easing costs across multiple categories

•⁠ ⁠Policy Outlook: Economists expect the RBI to consider deeper rate cuts, given inflation remains well below its medium-term target

•⁠ ⁠Household Relief: Lower food and beverage costs have provided immediate relief to consumers, particularly in urban areas.

Major Takeaways

•⁠ ⁠Monetary Policy Flexibility: The RBI now has room to pursue more aggressive rate cuts to stimulate growth.

•⁠ ⁠Economic Signal: The sharp disinflation reflects structural shifts in consumption and supply, alongside tax reforms.

•⁠ ⁠Caution Ahead: Analysts warn that October may mark the bottom of the cycle, with inflation expected to rise modestly in coming months.

Sources: Goodreturns, The Hindu Business Line, Business Today, Invezz

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