Why did India’s inflation crash to a record low in October

India’s retail inflation fell to a record low of 0.25% in October 2025, far below the RBI’s 2–6% band and market forecasts, because food prices fell sharply and GST rate cuts worked through the index for a full month. Food inflation was –5.02% year-on-year, with vegetables down about 27.6%, aided by improved supplies and a strong base from last year. The headline print dropped from a revised 1.44% in September, which lifted hopes for policy support while reminding that the fall may be temporary as base effects fade.​

Clear and broad drivers across food and essentials eased daily budgets, as prices of vegetables, fruits, oils and fats, and eggs softened together.​ The September 22 GST rationalisation had its first full-month effect in October and lowered prices across several CPI categories, amplifying disinflation. A high base from October 2024 made the October 2025 number even lower, delivering the series-low print in the 2012-base CPI series tracked by MoSPI.​

For policy and growth, this undershoot supports a growth-friendly stance because lower inflation eases pressure on real incomes and can create space for rate cuts if the trend holds. The RBI’s guidance has pointed to a softer path, with forecasts around 2.6% for FY26 as GST cuts and easier food prices work through, while tracking global commodity and domestic demand risks.