October 14, 2025
NEW DELHI – The Consumer Price Index (CPI)-based inflation for September has been recorded at 1.54 per cent, registering its lowest after June 2017.
In comparison to August, there is a decrease of 53 basis points in headline inflation.
The year-on-year Consumer Food Price Index (CFPI)-based inflation was recorded at (-)2.28 per cent (Provisional). Corresponding inflation rates for rural and urban are -2.17 per cent and -2.47 per cent, respectively, data released by the Ministry of Statistics & Programme Implementation (MoSPI) said.
The decline in headline inflation and food inflation during September is mainly attributed to a favourable base effect and to a decline in inflation of vegetables, oil and fats, fruits, pulses and products, cereal and products, eggs, fuel and light, etc.
Dipanwita Mazumdar, Economist, Bank of Baroda (BoB) said the overall inflation trajectory remains benign and supportive for monetary policy space. A favourable food supply, improved sowing, and adequate reservoir levels support further easing.
Vegetable arrivals have surged 13.8 per cent YoY (FYTD26 till Oct 12) versus a decline of 15.4 per cent last year. BoB’s Economic Conditions Index (ECI) shows -0.3 per cent MoM and -3.8 per cent YoY for the first 12 days of Oct 2025.
Risks to inflation remain tilted to the downside, though global energy and metal prices need monitoring due to tariff-related pressures.
Aditi Nayar, Chief Economist, ICRA, said, “The CPI inflation eased to a 99-month low 1.5 per cent in September 2025 (ICRA exp: 1.8 per cent), pulled down by a sharper-than-anticipated disinflation in food and beverages to 1.4 per cent (81-month low), despite several other categories recording a sequential uptick in YoY inflation prints.”
“For instance, inflation for miscellaneous items shot up to 5.35 per cent in September 2025, boosted by the surge in prices of gold and silver,” she added.
“We expect the CPI inflation to average 2.6 per cent in FY2026, dampened by the GST rationalisation as well as the continued benign food prices.”
ICRA believes that a final 25 bps rate cut is possible in December 2025, with its timing contingent on the degree of further transmission of the cumulative 100 bps rate cuts to the credit market as well as growth implications of GST rejig and tariffs.
“We expect downward revisions in the expected growth trajectory to drive the rate cut decision, rather than the benign CPI inflation outlook, with the latter being driven by tax policy changes and not weaker demand,” the chief economist of ICRA said.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said, “The soft September CPI inflation continues to point towards the persistence of a benign inflationary environment. While much of the moderation has been led by food prices, the core inflation has surged due to housing.”
“We expect the pass-through of the GST cut to be more visible in the upcoming October reading, likely pushing the print to sub-1 per cent. Overall, the benign inflation and growth trajectory do provide room for 25-50 bp rate cuts,” she added.