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Inflation Plunges to Lowest Level in 12 Years, Raising Hopes for RBI Rate Cut
16 Nov
Summary
- Inflation in India drops to 0.25% in October 2025, lowest since 2013
- Falling food prices and GST rationalisation drive the decline
- Experts predict CPI inflation to average 2.5% in fiscal 2025-26
In a significant development, India's inflation rate in October 2025 has plunged to 0.25%, the lowest level since the current data series began in 2013. This sharp decline has raised hopes of an interest rate cut by the Reserve Bank of India (RBI) in its upcoming monetary policy review.
The drop in inflation was primarily driven by lower food prices as well as the impact of the government's recent rationalisation of Goods and Services Tax (GST) slabs. Inflation was already low at 1.4% in September 2025 due to falling food prices, and this trend continued in October. The food index, in particular, recorded a deflation of 5%.
Experts believe the low inflation environment will persist. Research firm Crisil expects CPI inflation to average just 2.5% in the current fiscal year, significantly lower than the 4.6% recorded in the previous year. This is attributed to factors such as healthy food supplies, benign global crude oil prices, and the continued benefits of the GST rate cuts on mass consumption items.
The lower inflation and the prospect of an RBI rate cut are expected to provide an additional boost to consumption in India. A cut in interest rates would make retail loans, including for consumer goods and homes, more affordable, further stimulating demand.
