India’s Retail Inflation Hits Record Low of 0.25% in October 2025
India’s retail inflation plummeted to a historic low of 0.25% in October 2025, marking the lowest year-on-year rate in the current Consumer Price Index (CPI) series. The sharp decline was primarily driven by significant GST rate cuts and favorable base effects.
Key Takeaways
- Headline inflation dropped by 119 basis points from September 2025
- Food inflation turned negative at -5.02%, a decrease of 269 basis points
- GST reduction impact visible across multiple sectors including food items and transport
Inflation Drivers and Sectoral Impact
The Ministry of Statistics and Programme Implementation attributed the decline to the full month’s impact of GST reductions, favorable base effects, and falling prices in essential categories including oils and fats, vegetables, fruits, eggs, footwear, cereals, and transport services.
Expert Analysis and RBI Outlook
Economists remain cautiously optimistic about the inflation trajectory.
“Going ahead, while the inflation trajectory is likely to remain benign, RBI will need to filter the festive and GST related demand from the cyclical recovery. We remain skeptical on the sustainability of the recent pickup in economic activity and hence see some room for further monetary easing,” said Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank.
Aditi Nayar, Chief Economist at ICRA, noted: “The MPC is likely to pare its CPI inflation projection for FY2026 further from 2.6%, driven by the soft sequential momentum in food prices as well as the impact of the GST rate rationalisation.”
Monetary Policy Expectations
The RBI had maintained its benchmark repo rate at 6.5% for eleven consecutive meetings before implementing its first cut in five years during February 2025. Most analysts anticipate further monetary easing if inflation remains controlled.
Nayar added that the dovish policy tone supports a potential 25-basis-point rate cut in the December 2025 policy review, though upcoming economic data will be crucial for the final decision.
