India’s retail inflation rate has plummeted to just 0.25% in October 2025, marking its lowest level in over a decade and the lowest in the current Consumer Price Index (CPI) series, according to official data released by the Ministry of Statistics & Programme Implementation (MoSPI).
This sharp decline was primarily driven by a steep fall in food inflation, which entered deflation territory at –5.02%, led by easing prices in vegetables, pulses, and edible oils. Urban inflation stood at 0.32%, while rural inflation was slightly lower at 0.19%.
The ministry attributed the dip to a combination of factors the impact of recent GST rate cuts, a favourable base effect, and falling prices in multiple categories, including oils and fats, vegetables, fruits, eggs, footwear, cereals, and transport & communication.
“The decline in headline inflation and food inflation during the month of October 2025 is mainly attributed to the full month’s impact of decline in GST rates, favourable base effect, and the drop in inflation across key categories,” the Ministry said in its release.
Economists, however, cautioned that the dramatic fall may be more statistical than structural.
“Food inflation has come down mainly due to base effects,” said Madan Sabnavis, Chief Economist at Bank of Baroda. “In their absence, it would have been higher. Prices of vegetables in particular have increased in the market place.”
Indeed, the data shows that food and beverages prices contracted by 3.7% in October 2025, compared to a 1.4% contraction in September. Food and beverage prices have now seen contraction in four out of seven months of the current financial year.
Sectoral Breakdown
While food prices saw a record fall, other CPI components presented a mixed picture:
Fuel & light inflation rose to 2%, up from a contraction of 1.7% a year ago.
Housing inflation edged up to 3% from 2.8% last year.
Clothing & footwear inflation eased to 1.7%, likely aided by GST rate reductions.
Pan, tobacco, and intoxicants quickened to 2.9% from 2.5%.
Miscellaneous category inflation surged to 5.7%, compared to 4.3% in October 2024.
Policy Outlook
Economists say the fall in headline inflation will bolster the Reserve Bank of India’s policy stance, giving it more space to support growth through an accommodative approach. However, they also warn that the sharp drop may not reflect a broad-based easing of prices, especially since several essential goods have not seen real declines in retail markets.
“This historic dip highlights strong price stability and effective government supply management,” said a senior official, “but sustaining it will depend on how food and energy prices evolve in coming months.”
With inflation at a 12-year low, India enters a rare period of price calm one that may lift consumer sentiment and spending power, but also raises questions about the durability of the trend once base effects fade.
