Advertisement
India's retail inflation fell to a record low of 0.25% in October, driven by broad-based food price declines, GST cuts, and base effects. Core inflation rose slightly to 4.4%, though it moderated to 2.64% after excluding volatile items. Economists said the low inflation provides temporary relief for households and businesses but could affect rural incomes and demand. Despite the historic dip, inflation is expected to rise gradually in the coming months, with forecasts projecting it to near 4% by March 2026. The RBI may consider a modest rate cut.
India's annual retail inflation slowed sharply to a record low of 0.25% in October, dropping from a revised 1.44% in September, according to government data released earlier this week. Analysts had forecast a rate of 0.48%, reflecting the significant moderation in consumer price pressures. Advertisement
Experts attributed the fall to a combination of GST cuts, favorable base effects, and broad-based easing in food and transport prices. The food and beverages segment was the largest contributor to the decline, with deflation widening to 3.7% from 1.4% in the previous month, accounting for most of the drop in headline inflation.
Core inflation, which excludes volatile items like food and energy, inched up to 4.4% due to rising gold prices. Excluding gold, silver, petrol, and diesel, core inflation moderated to 2.64% from 2.98% in September. Analysts noted that while the current inflation level is historically low, base effects and temporary GST-related impacts mean it may not have a lasting effect on monetary policy.
Several economists highlighted that the disinflationary trend offers relief for households and businesses by easing input cost pressures and supporting corporate margins. However, prolonged low inflation could weigh on rural incomes and domestic demand. Despite these record lows, inflation is expected to pick up in the coming months, with forecasts suggesting it could approach 4% by March 2026.
From a policy perspective, the Reserve Bank of India (RBI) may consider a modest rate cut of 25-50 basis points in its December monetary policy review to support growth while monitoring the trajectory of inflation. Analysts also indicated that the subdued inflation environment is partly temporary and driven by statistical base effects, low food prices, and tax reductions. They expect a rebound in inflation in November and anticipate average inflation for FY26 to remain below 2.6%, undershooting RBI's earlier projections.
The current trend marks the lowest point in the CPI series since 2012, reflecting a near-deflationary phase. Experts stressed that this is likely the floor, and inflation is expected to gradually rise as the base effect diminishes and seasonal factors play a larger role.
Source Reuters
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
