Retail inflation hits a record low of 0.25% in October

India’s retail inflation hit a record low of 0.25% in October on the back of deflation in food prices (-5.02%) and impact of GST cuts across all segments during the month, according to ministry of statistics. This is the lowest inflation rate recorded in the current data series

The decline in headline and food inflation during October is mainly attributed to overall impact of GST cuts, and a drop in inflation of oils and fats, vegetables, fruits, egg, footwear, cereals and products, and transport and communication, among others.

It may be noted that retail inflation was 6.21% in October 2024, while food inflation hovered at 10.87% during the month last year. The data set comes as a major reprieve for the policy makers as this will provide much needed head room to the RBI for further monetary easing.

“The monetary policy committee is likely to pare its CPI inflation projection for FY2026 further from 2.6% (as mentioned in October 2025 meeting), driven by the soft sequential momentum in food prices as well as the impact of the GST rate rationalization on several items in the CPI basket,” said Aditi Nayar, Chief Economist, ICRA Ltd.

“This, along with the dovish tone of the October 2025 policy document, would support a 25-bps rate cut in the December 2025 policy review, unless Q2 FY2026 GDP growth surprises on the upside,” Nayar added.

In what comes as a major relief for the households, the prices of the vegetables have witnessed a degrowth of 27.5% during the month over the previous year, while the prices of pulses have come down by 16.15%. With the price pressure easing on households, it remains to be seen whether the discretionary spending will go up in the economy. Nonetheless, this indeed is a good signal.

Deflation witnessed in both retail prices and food inflation in the rural sector is another good macro indicator and may augur well for the rural consumption. Headline inflation (rural) turned negative at -0.25% in October, down from 1.07% in September. The CFPI-based food inflation in the rural sector was -4.85% (Provisional) in October, compared with -2.22% in September.

In the urban sector, retail inflation decreased from 1.83% in September to 0.88% in the month. The annual housing inflation rate for October stood at 2.96% (Provisional).