India’s retail inflation hits record low of 0.25%

• India’s retail inflation dropped to a record 0.25% in October 2025, the lowest since 2015.
• Food prices fell by more than 5%, while vegetables saw a 27% year-on-year decline.
• Economists expect a December rate cut, followed by another in February 2026.
• Core inflation remained elevated at 4.4%, largely due to higher gold prices.

India’s retail inflation eased sharply to a record low of 0.25% in October, supported by a steep fall in food prices and the full effect of tax cuts on mass consumption goods, strengthening expectations of a rate cut by the Reserve Bank of India (RBI) in December.

According to official data, this was the lowest reading since the current data series began in 2015, which uses 2012 as the base year for price levels.

Inflation remained below the RBI’s 2%–6% tolerance range for the second consecutive month. The central bank is mandated to ensure inflation stays within this range and does not breach the upper band for more than three quarters in a row.

The inflation figure for September was revised to 1.44%, while a Reuters poll had estimated the October reading at 0.48%.

“We see FY26 CPI below 2%, paving the way for a December 2025 rate cut by the RBI and another 25 basis points cut in February 2026,” said Garima Kapoor, economist at Elara Securities.

The government attributed the decline in headline and food inflation to the full impact of recent GST cuts. In late September, India slashed goods and services tax on hundreds of mass consumption items, including dairy and personal care products, in a move aimed at stimulating domestic demand amid global trade uncertainty and the 50% punitive tariffs imposed by the United States.

Food prices fell by a record 5.02% year-on-year in October, compared with a revised decline of 2.33% in September. Within the food category, vegetable prices dropped 27.57%, following a 21.38% fall in the previous month.

Cereal prices rose modestly by 0.92% in October compared with a 2.1% increase in September, while pulses prices declined by 16.2%, extending a 15.3% fall from the previous month.

Core inflation, which excludes food and fuel and reflects underlying demand trends, stood at 4.4% in October, marginally lower than 4.5% in September, according to two economists.

The relatively firm core inflation was attributed to a rise in domestic gold prices, which climbed nearly 5% in October.

“The continued surge in gold price inflation, which feeds into the miscellaneous goods and services category, appears to have more than offset the impact of the GST cuts,” said Shivaan Tandon, Asia Economist at Capital Economics.

With inflation at a record low and consumption expected to rise during the festive season, analysts believe the conditions are aligning for the RBI’s first rate cut in nearly two years, possibly at its December 2025 policy meeting.