India’s Retail Inflation Falls To 1.54% In September, Lowest Since 2017

India's retail inflation dropped sharply to 1.54% in September 2025, the lowest level since June 2017, falling well below the Reserve Bank of India's (RBI) 2-6% target range. Data from the Ministry of Statistics and Programme Implementation shows a significant decline from 2.07% in August, driven mainly by sustained decreases in food prices across key categories.

The Consumer Food Price Index (CFPI) recorded deflation of -2.28%, its lowest in nearly seven years, as prices of vegetables, pulses, cereals, and edible oils fell substantially. This marks the fourth consecutive month of negative food inflation, supported by favorable base effects, strong kharif crop supplies, and ample stock levels of grains and pulses. Food inflation turned negative in both rural (-2.17%) and urban (-2.47%) areas, while overall rural inflation eased to 1.07% and urban inflation cooled to 2.04%.

Economists attribute the slowdown to a combination of factors including robust agricultural output, moderating fuel prices, and recent GST rate cuts on essential consumer goods implemented in late September, which helped curb overall price pressures. However, not all sectors saw relief. Inflation for miscellaneous goods and services rose to 5.35%, driven by higher costs for gold, silver, and housing, while core inflation (excluding food and fuel) remained around 4.5%, reflecting modest underlying demand in the economy.

This latest reading is the lowest in 99 months, and analysts expect inflationary pressures to remain subdued through the end of 2025. The Reserve Bank of India, which kept its policy rate steady at 5.5% in October, may consider a rate cut in December if the disinflation trend continues.

Overall, India's inflation trajectory reflects both structural resilience and favorable short-term conditions. Softening commodity prices, a healthy monsoon, and easing supply-side constraints are expected to support stable price growth in the coming quarters.