India’s retail inflation cools to 8-year low of 1.54pc in September, boosting policy easing hopes

THEBUSINESSBYTES BUREAU

NEW DELHI, OCTOBER 13, 2025

India’s retail inflation, measured by the Consumer Price Index (CPI), eased sharply to an over eight-year low of 1.54 per cent in September 2025, driven by falling prices of food and fuel items, according to data released by the Ministry of Statistics on Monday.

This marks the lowest year-on-year inflation since June 2017 and is well below the 2.05 per cent recorded in August, reflecting a sustained moderation in price pressures across key consumption categories.

Food inflation remained in the negative territory for the fourth straight month, contracting 2.28 per cent in September as prices of vegetables, edible oils, fruits, pulses, cereals and eggs softened significantly. Fuel prices also declined, further easing household expenses and transportation costs.

“The fall in headline and food inflation during September is primarily due to a favourable base effect and the continued decline in prices of key food items and fuels,” the ministry said in a statement.

Analysts believe the inflation trajectory is turning more benign for the rest of FY2025-26, supported by a good southwest monsoon, healthy kharif sowing, comfortable reservoir levels, and adequate foodgrain buffer stocks. The GST rate cuts implemented on September 22 are also expected to exert further downward pressure on prices in the coming months.

The sharp drop in inflation strengthens expectations of a monetary policy easing by the Reserve Bank of India (RBI), giving the central bank greater flexibility to cut interest rates and inject liquidity to accelerate economic growth.

With inflation now well below the RBI’s medium-term target of 4 per cent, the economy appears poised for a period of low inflation and steady recovery, offering a strong policy window to spur consumption and investment momentum.