Retail inflation for October likely to go below 1%

With the first full month of GST rate cut impact, retail inflation based on Consumer Price Index (CPI) is likely to have dipped below 1 per cent in October. Officially, the data will be made public on Wednesday. Economists expect the rate could touch as low as 0.2 per cent.

Inflation rate was 1.5 per cent in September.

Retail inflation is a key tool for the monetary policy review undertaken by the Monetary Policy Committee (MPC) headed by RBI Governor Sanjay Malhotra. The next meeting of the Committee is scheduled for next month. It is expected that the committee might consider a policy rate cut. There is also expectation that the inflation projection for the second half of the current fiscal could be lowered by the MPC.

GST rate cut was made effective from September 22. While some impact was visible in September print, a higher impact is expected in October headline number. At the same time, prices of food items have also dipped further which could also be reflected in the headline number.

“The CPI inflation is expected to ease to a series low of 0.5 per cent in October 2025 from 1.5 per cent in September 2025, reflecting a deeper deflation in the F&B segment as well as the impact of the GST rate cut across several items in the CPI basket,” Aditi Nayar, Chief Economist at ICRA said.

Radhika Rao, Executive Director and Senior Economist at DBS Bank expects October’s CPI inflation to ease to a fresh low of 0.2 per cent (weakest print in the current series) from 1.5 per cent in September on continued food disinflation, base effects and impact of GST cuts. “Food disinflation is likely to deepen as high-frequency trends pointed to a correction in perishables, pulses, cereals etc,” she said.

Further, the disinflationary impulse from indirect tax relaxation is likely to be more apparent as changes took effect in late September. Core inflation might stay firm on higher precious metals, before easing in November.

October is, nonetheless, likely to mark the trough in the current cycle, with base effects expected to see inflation resume its gradual climb in the coming months.

Meanwhile, “unseasonal rains might impinge on the supply of fresh food perishables in the near-term. This, alongside an increase in import duties on selected pulses, reinforces our view that the bulk of the disinflation in food is likely behind us,” Rao said.

In response to potential supply shortages and sensitivities around food costs, Rao expects authorities to undertake administrative measures, including steps to boost inter-state supplies to contain price increases.

Meanwhile, economists are also expecting a change in inflation projection. “We expect the MPC to revise its CPI inflation projections for H2 FY2026 downwards once again, when it meets in December 2025, taking the average for FY2026 to 2.4 per cent from its current forecast of 2.6 per cent,” Nayar concluded.

Published on November 11, 2025