Inflation falls to record low of 0.25% in October; food prices ease further

Inflation for October

India’s retail inflation eased sharply to 0.25 percent in October, its lowest level in the current series that began in 2013, down from 1.44 percent in September, opening room for a rate cut in the upcoming meeting said economists.

"The retail inflation came in line with expectations, softening largely due food prices even as core inflation steady at 4.4%. Going ahead, while the inflation trajectory is likely to remain benign, RBI will need to filter the festive and GST related demand from the cyclical recovery. We remain skeptical on the sustainability of the recent pickup in economic activity and hence see some room for further monetary easing," ⁠Upasna Bhardwaj, chief economist, Kotak Mahindra Bank.

The moderation was led by a continued decline in food prices, with the food index falling to -5.02 percent in October from -2.3 percent in the previous month, reflecting a broad-based softening in key staples and edible items.

"The dip was largely driven by F&B segment, with the deflation in the same widening to 3.7% from 1.4% in the previous month. This accounted for as much as 116 bps of the 120 bps cooling in the headline inflation print between September 2025 and October 2025," said Aditi Nayar, chief economist, Icra.

Sequentially, while food prices were down 0.25 percent from the previous month, overall index rose 0.15 percent in October.

Cereal inflation declined 0.92 percent in October, its lowest reading in four years, while deflation in pulses and vegetables extended further for a ninth consecutive month.

Oil was the only category within food which registered a double digit inflation in October, even as prices eased from the previous month. Coconut oil inflation at nearly 93 percent was the highest among items, as per ministry data.

On the core side, miscellaneous categories, which includes gold and silver, was the only category to experience a faster rise in prices with inflation rising to 31-month high of 5.71 percent compared with 5.35 percent in the previous month.

"Among the other items, the miscellaneous segment witnessed an uptick in its YoY inflation prints to a 31-month high of 5.7% in October 2025, largely led by gold. Core inflation (CPI excluding F&B, F&L, and petrol and diesel for vehicles) remained unchanged at 4.5% with the impact of the GST rationalization getting dulled by the spike in gold and silver prices during the festive season," Nayar said.

Personal care and effects inflation rose further to 23.9 percent compared with 19.4 percent the previous month.

Inflation has now averaged 2.22 percent in the first half of FY26, staying well below the Reserve Bank of India’s (RBI) medium-term target of 4 percent. The trend reinforces the easing price environment that has prevailed since mid-year, driven by subdued global commodity prices and a high base effect.

Reflecting this moderation, the RBI recently lowered its FY26 inflation forecast to 2.6 percent from 3.1 percent earlier, while maintaining a cautious stance amid uncertainties in global energy and food markets.