India’s Retail Inflation Falls To Eight-Year Low In September

Retail inflation in India dropped to 1.54% in September 2025. This is the lowest rate since June 2017. The fall is mainly due to declining food and fuel prices. Inflation now stands below the Reserve Bank of India’s (RBI) lower comfort limit of 2%. This easing offers relief to consumers and may influence future monetary policy decisions.

Current Inflation Trends

Inflation, measured by the Consumer Price Index (CPI), fell below 2% after a brief rise in August. Food and beverages prices contracted by 1.4% in September. This compares with a small rise in August and a much higher inflation rate of 8.4% in the same month last year. Fuel and light inflation also eased to 1.98% from 2.3% in August. These trends reflect easing pressure on household budgets.

Food Inflation Analysis

Food inflation remains subdued due to a good monsoon and a favourable base effect. However, risks persist from delayed monsoon withdrawal and heavy rains in some regions, which could damage crops. Edible oils continue to show high inflation at 18.3%, marking the 11th consecutive month of double-digit inflation. This is driven by weak sowing, import dependence, and high global prices.

Fuel and Energy Inflation

Fuel inflation has been easing since April, except for one month. The current rate at 1.98% signals lower energy costs. This reduction helps reduce overall inflationary pressures and supports consumer spending power.

Other Sectoral Inflation

Clothing and footwear inflation slowed to 2.28% in September from 2.33% in August. This marks the fifth month of deceleration in this category. In contrast, inflation in pan, tobacco and other intoxicants accelerated to 2.7%. Housing inflation rose to 4% from 3.1% in the previous month, indicating rising costs in this sector.

Monetary Policy Implications

The RBI’s Monetary Policy Committee has revised its inflation forecast downwards four times consecutively. The current low inflation figures raise expectations of a possible interest rate cut in the December policy review. Such a move would aim to support economic growth while maintaining price stability.