Retail inflation falls to 0.25 per cent in October 2025

Retail inflation, measured by the Consumer Price Index, tracks how much more, or less, a representative basket of goods and services costs compared with a year earlier. The Reserve Bank of India is required to keep consumer price inflation at 4 per cent, within a band of 2 percentage points on either side, so the monthly inflation print is one of the most watched numbers in Indian economic policy. It affects interest rate decisions, household budgets, and wage negotiations.

In October 2025, retail inflation fell to 0.25 per cent year-on-year, the lowest in the current Consumer Price Index series, which began in 2015 with 2012 as the base year. The figure was down 119 basis points from September 2025, whose print was revised to 1.44 per cent, and it followed a steady moderation through 2025. Food inflation, measured by the Consumer Food Price Index, fell to minus 5.02 per cent, meaning food items were on average 5 per cent cheaper than a year earlier, with vegetables, pulses, spices, cereals, and eggs all contributing to the decline.

Three factors explained the low print, according to the Ministry of Statistics and Programme Implementation. First, a favourable base effect: inflation a year earlier, in October 2024, had been 6.2 per cent, so even a normal price level in October 2025 looked low by comparison. Second, sustained falls in food prices, driven by better supply and moderating global prices. Third, the full month's impact of GST rate cuts that took effect on 22 September 2025, which reduced prices in transport and communication, clothing and footwear, health, and other categories.

The headline figure, however, concealed a different story underneath. Core inflation, which excludes volatile food and fuel prices, was about 4.33 per cent in October, up slightly from September, driven in part by gold and silver prices, with gold inflation reported at about 57.8 per cent. Excluding gold, core inflation was lower, at about 2.6 per cent, according to contemporary reporting. Rural inflation fell to minus 0.25 per cent, while urban inflation was 0.88 per cent, and Kerala recorded the highest state inflation, at 8.56 per cent, driven by food and gold prices.

In November 2025, headline inflation rose again, to 0.71 per cent, as food deflation eased to minus 3.91 per cent and vegetable, egg, meat, fish, spice, and fuel prices rose. The October low was therefore a trough, not a new normal, and it illustrates why a single month's inflation figure should not be read in isolation. A low headline rate driven by food and a base effect can coexist with firmer core inflation, and both matter for policy.