India’s retail inflation is expected to have dropped sharply to 0.48% in October 2025, according to a Reuters poll of 42 economists. If confirmed, this would mark the lowest level in over a decade, signalling a significant easing in price pressures across the economy. The fall is largely attributed to lower food prices, reduced commodity costs, and the statistical impact of a high base from the previous year.
Food Prices Drive the Decline
A major reason behind this sharp fall in inflation is the moderation in food prices, which make up nearly half of India’s Consumer Price Index (CPI) basket. Prices of vegetables and key perishables have seen double-digit declines compared to last year, helping cool overall inflation. Additionally, the government’s recent cuts in GST rates and steady global commodity prices have also contributed to keeping inflation in check.
Core Inflation and Wholesale Trends
Core inflation, which excludes food and fuel prices to show underlying price stability, is estimated to have eased to around 4.3% in October. The wholesale price index (WPI), another key indicator of cost trends in the supply chain, may have declined by about 0.6% year-on-year, reinforcing the signs of broad-based disinflation across sectors.
Implications for the Economy and Investors
This sharp fall in inflation gives the Reserve Bank of India (RBI) more flexibility to consider monetary policy easing in the coming months. Lower inflation can support borrowing, spending, and overall investment activity. Sectors that are sensitive to interest rates such as housing finance, automobiles, and consumer durables could particularly benefit if rates soften further.
However, experts caution that the current drop may be temporary. Factors like erratic weather conditions, potential supply disruptions, or global price movements could lead to a rebound in inflation later in the year. Hence, investors and policymakers alike need to remain watchful of future trends.
Outlook
With inflation nearing historic lows, India’s macroeconomic outlook appears more stable in the short term. The combination of easing prices, resilient growth, and possible rate flexibility from the RBI paints a positive picture for the economy heading into 2026. Yet, sustaining this momentum will depend on maintaining supply stability and ensuring demand does not outpace production.
Source: The Economic Times