Retail inflation cools to 99-month low at 1.5% in September
India’s retail inflation cooled to 1.54 per cent in September from 2.07 per cent the previous month, marking the lowest reading in eight years since June 2017, mainly due to the statistical effect of a favourable base and driven by lower prices of vegetables.
“The decline in headline inflation and food inflation during the month of September 2025 is mainly attributed to favourable base effect and to decline in inflation of vegetables, oil and fats, fruits, pulses and products, cereal and products, egg, fuel and light, etc,” a statement by the Statistics Ministry said.
Meanwhile, core inflation (headline inflation minus food and fuel inflation) surged to a two-year high of 4.5 per cent in September after remaining stable at around 4.1 per cent over the past seven months.
“Record-high inflation in personal care and effects at 19.4 per cent (driven by gold), alongside housing inflation reaching over a two-year high at 4 per cent in September, were major contributors to the spike in core inflation,” said Paras Jasrai, Associate Director with Inda Ratings & Research.
Rate cut talks
However, experts do not find any merit in the rising chorus for another policy rate cut.
“Overall, the benign inflation and growth trajectory does provide room for 25-50 bps rate cuts. However, the festive-linked surge in retail sales may make it difficult to gauge the underlying sustainable demand in the economy and hence the timing of easing may become more difficult,” Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, said.
In a note, HDFC Bank said since inflation is below the RBI’s target, there is space for another 25-50 bps of rate cuts. However, further rate cuts could be delivered only if growth momentum weakens significantly, and tariff risks continue to loom. “In our base case, we expect no further rate cuts from the RBI. However, if downside risk to growth emerges, we could see the policy rate inch towards 5 per cent by FY26,” it said.
Published on October 13, 2025
