India’s retail inflation is projected to decline further in October 2025, supported by a high base effect, delayed seasonality in food prices, and the continuing impact of recent Goods and Services Tax (GST) reforms, according to a report by Union Bank of India, as cited by ANI.
The bank noted that inflationary pressures are expected to remain mild in the coming months. “Our projection for October CPI is tracking below 0.50 per cent as on date. Food inflation too is expected to fall sharply in October and continue to be in the negative zone during the coming winter months, with the impact of floods muted,” the report stated.
The assessment follows a sharp easing in inflation to an eight-year low, largely driven by falling food prices and the rationalisation of GST rates. Union Bank revised its Consumer Price Index (CPI) inflation forecast for FY26 downward to 2.6 per cent from 3.1 per cent earlier, expecting inflation to stay below the Reserve Bank of India’s 4 per cent target for most of the fiscal year.
In the latest data, rural inflation stood at 1.07 per cent, while urban inflation was slightly higher at 2.04 per cent. Food inflation remained in the negative across both segments — -2.17 per cent in rural areas and -2.47 per cent in urban areas — primarily due to lower prices of vegetables, edible oils, and other essential commodities.
The government has attributed the easing trend in inflation to a “favourable base effect” and declining prices in key food categories, including vegetables, oils and fats, fruits, cereals, pulses, eggs, and fuel and light.
Economists note that the moderation offers relief to households and supports the broader inflation outlook for policymakers. However, they caution that prices could inch up marginally towards the end of the financial year as the base effect wanes and festive demand strengthens.
Overall, the trajectory indicates sustained price stability, aided by policy interventions, improved supply chain efficiencies, and the ongoing benefits of GST reforms.
