India’s Retail Inflation Hits Record Low of 0.25% in October
Description :
India’s consumer inflation drops to a historic low of 0.25% in October, driven by easing food prices and targeted tax cuts amid global economic recovery.
Published on:
12 November 2025 | 09:25 PM (GMT+05:30, IST, India)
Published by: Mr. Dibakar Mandal
Introduction
In a surprising turn for Asia’s third-largest economy, India’s retail inflation (CPI) fell sharply to 0.25% in October 2025, marking its lowest level since the consumer price index series began. The fall, largely driven by a steep decline in food and fuel prices and reinforced by recent tax rationalisation measures, signals a rare phase of price stability for the Indian economy.
Economists say the moderation provides both relief for consumers and room for the Reserve Bank of India (RBI) to maintain its growth-oriented policy stance. The Ministry of Finance described the figures as “a sign of sound fiscal management and targeted reforms” that helped cool prices after months of volatility.
This decline also comes as global markets battle ongoing energy shocks, shipping disruptions, and climate-induced agricultural stress. Against that backdrop, India’s inflation trajectory has stood out, bolstering its position among the fastest-growing yet most stable major economies.
Inflation Drop Explained
The Consumer Price Index (CPI) reading of 0.25% for October reflects a combination of structural and policy-led factors. Food prices — especially vegetables, cereals, and edible oils — saw sharp month-on-month declines. The government’s decision to cut excise duties on fuel, reduce import tariffs on key commodities, and increase public distribution supply also contributed.
According to data from the National Statistical Office (NSO), the food inflation component dropped from 1.9% in September to -0.6% in October, led by improved rabi crop arrivals and a gradual easing of global commodity prices.
Energy inflation also softened as crude oil prices fell below $65 per barrel for the first time in months, driven by higher output from OPEC+ nations and steady renewable power integration. The combined effect has been a flattening of cost pressures across the production and consumption chain.
Expert Views and Market Reaction
Economists See “Momentary But Positive Relief”
Economists caution that the record low may not persist for long.
“This dip in inflation is encouraging, but transitory,” said Dr. Rajeswari Sengupta, Professor of Economics at IGIDR. “A favourable base effect and temporary food-price correction are the primary drivers. Underlying core inflation remains above comfort levels.”
Stock Markets Cheer the News
The BSE Sensex gained over 450 points intraday following the CPI release, while the Nifty 50 closed 0.8% higher, led by FMCG and consumer discretionary stocks. Lower inflation typically translates into stronger household spending power, boosting demand-sensitive sectors.
RBI May Stay Cautious
Analysts predict that the Reserve Bank of India will likely maintain its current repo rate of 6.25%, refraining from any rate cuts until core inflation stabilises below 3%. The bank’s monetary policy committee is expected to focus on maintaining liquidity support while avoiding overheating in credit markets.
Global Context: How India Compares
Internationally, India’s inflation trajectory stands in sharp contrast to that of major economies.
- The United States reported 3.1% inflation in October, still above the Federal Reserve’s 2% target.
- The Eurozone registered 2.5%, while Japan hovered around 2.2%.
- Emerging markets like Brazil and Turkey continue to battle double-digit inflation due to weak currencies and high import dependency.
India’s inflation success story aligns with global recognition of its fiscal prudence. According to a World Bank report released this month, India’s “balanced approach of supply-side interventions and calibrated monetary policy” has positioned it favourably among G20 economies.
Government Response and Fiscal Policy Moves
The Finance Ministry credited a combination of “responsible fiscal spending, logistics efficiency, and rural market stabilisation” for the dramatic inflation cooldown. Key measures included:
- Targeted Food Price Interventions: Increased distribution of grains and pulses under the PMGKAY scheme.
- Tax Rationalisation: Reduction in GST rates for essential goods.
- Fuel Duty Adjustments: Lowering excise duty to offset crude volatility.
- Supply Chain Support: Incentives for cold storage, warehousing, and last-mile logistics efficiency.
Officials also noted that the Public Distribution System (PDS) and eNAM (National Agriculture Market) integration helped contain rural inflation by improving procurement and distribution transparency.
Potential Economic Impact
Positive for Consumers and Businesses
The lower inflation rate directly enhances consumer purchasing power. Households benefit from reduced food and transport costs, which can boost consumption-driven growth. Corporates, especially in retail, manufacturing, and logistics, could see input-cost relief.
Exports and Trade
India’s competitive inflation rate strengthens its export competitiveness by maintaining relative price stability. As Western economies grapple with cost-of-living pressures, Indian goods and services become more attractive globally.
Fiscal Room
With inflation subdued, the government may have more flexibility to pursue infrastructure and social welfare spending, without triggering inflationary pressures.
Risks and Caution Ahead
Despite the record low, analysts warn against complacency. A sudden reversal in food or energy prices, global shipping disruptions, or monsoon irregularities could reignite inflation. Core inflation, which excludes food and fuel, remains around 3.4%, indicating persistent underlying pressures.
The International Monetary Fund (IMF) has urged economies to remain vigilant as commodity and climate shocks continue to reshape price dynamics. For India, maintaining this momentum will depend on sustained supply chain improvements and energy diversification.
Conclusion
India’s inflation story in October 2025 represents a rare convergence of fiscal prudence, policy alignment, and favourable market conditions. While short-term moderation has offered breathing space for consumers and businesses alike, long-term price stability will require deeper structural resilience.
If sustained, the current phase could reinforce India’s credibility as a stable investment destination in an uncertain global environment — a milestone on the road to its 2047 growth vision.
Frequently Asked Questions (FAQs)
1. What caused India’s inflation to fall so sharply in October 2025?
A combination of lower food prices, reduced fuel duties, improved supply chains, and global commodity easing contributed to the sharp decline in CPI inflation.
2. Is this record-low inflation sustainable?
Experts believe it may be temporary. Seasonal factors and the global oil market could influence future inflation readings.
3. How does this impact the Reserve Bank of India’s policy?
The RBI is likely to maintain its current policy rate while monitoring core inflation. A sustained low trend may open the door to rate cuts in mid-2026.
4. How does India compare to other economies?
India’s inflation is significantly lower than that of the US, Eurozone, and most emerging markets, underscoring its effective fiscal management.
5. What are the key benefits of this low inflation for citizens?
Consumers will enjoy lower food and transport costs, while businesses benefit from reduced input costs and improved demand conditions.
External Resources and References
- World Bank Global Inflation Outlook
- International Monetary Fund – India Country Report
- Reserve Bank of India CPI Data Portal
- Reuters – India Economic Indicators
- BBC News – South Asia Economy Updates
- UNCTAD – Global Commodity Trends
