Key Takeaways
- Retail inflation projected to drop below 0.50% in October 2025
- Food inflation expected to remain negative through winter months
- FY26 CPI forecast revised down to 2.6% from 3.1%
India’s retail inflation is set to decline further in October 2025, potentially reaching an eight-year low, according to a Union Bank of India report. The downward trend is driven by high base effects, delayed food price seasonality, and the full impact of recent GST reforms.
Inflation Projections and Trends
The report states: “Our projection for Oct CPI is tracking below 0.50 per cent as on date. Food inflation too is expected to fall sharply in Oct and continue to be in negative zone during the coming winter months with impact of floods muted.”
Price pressures are expected to see only a gradual pickup in the coming months, with inflation remaining below target for most of FY26.
Current Inflation Data
September data showed continued moderation in price growth. The Consumer Food Price Index (CFPI) remained negative at -2.28%, marking the fourth consecutive month of declining food prices since June 2025.
Regional data revealed:
- Rural inflation: 1.07%
- Urban inflation: 2.04%
- Rural food inflation: -2.17%
- Urban food inflation: -2.47%
Government Assessment
The government attributes the decline to “favourable base effects” and price reductions across essential categories including vegetables, oils and fats, fruits, cereals, pulses, eggs, and fuel & light. The GST rate rationalisation has also contributed significantly to the inflation moderation.
