Retail inflation in India eased to a more than eight-year low of 1.54% in September 2025, falling below the Reserve Bank of India’s (RBI) target range, largely due to lower prices of vegetables, fruits, and pulses, as per government data released on Monday. This marks a decline from 2.07% in August and 5.49% in September 2024. The last time inflation was this low was in June 2017 at 1.46%.
This is the second instance in 2025 where inflation dropped below 2%. The RBI is tasked with maintaining CPI inflation at 4%, with a 2% margin on either side. The National Statistics Office (NSO) noted a 53-basis-point decline in September’s inflation compared to August.
Food inflation fell sharply to -2.28% in September from -0.64% in August, primarily due to falling prices of vegetables, fruits, cereals, oil, eggs, and fuel. Rural inflation was 1.07%, while urban inflation stood at 2.04%. Kerala reported the highest inflation at 9.05%, while Uttar Pradesh recorded the lowest at -0.61%.
Economists expect inflation to remain subdued, supported by strong monsoons, good crop output, and GST rate cuts. Projections for FY26 inflation now stand at 2.6%, and analysts suggest a potential rate cut later in the year if current trends continue.
