Informist Poll
Oct CPI inflation seen at record low on base effect, GST cut
This story was originally published at 17:51 IST on 7 November 2025
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By Shubham Rana
NEW DELHI – Retail inflation in India likely fell to a record low in October, thanks to the statistical effect of a high base, lower food prices, and reduction in goods and services tax rates, according to economists.
CPI inflation is projected to fall to 0.3% in October, according to an Informist poll of 12 economists. At 0.3%, this would be the lowest CPI inflation print in the current CPI series, which has data since 2014. The lowest CPI inflation print in the current series is 1.46% in June 2017.
Inflation was 6.21% in October last year and fell to an over eight-year low of 1.54% in September because of a high base and a fall in food prices. October would be the ninth consecutive month of CPI inflation staying below the Reserve Bank of India's medium-term target of 4%. This will also be the third time in four months when inflation has been below the lower end of the RBI's target range of 2-6%.
The record low inflation print could provide the RBI's Monetary Policy Committee space to lower interest rates further in December. The rate-setting panel has lowered the repo rate by 100 basis points so far in 2025, including a cut of 50 bps in June.
"There is a risk that CPI inflation could undershoot the Reserve Bank of India's forecasts, but its reversal is also
imminent in FY27," ANZ Bank said in a report. "This means there is limited additional monetary policy space to support growth. We expect one more 25bp rate cut in December 2025 for now, much also depending upon the state of growth." The RBI projects inflation to average 2.6% in 2025-26 (Apr-Mar).
The estimates for October CPI inflation range from 0.2% to 0.8%. The statistics ministry will release CPI data for October at 1600 IST on Wednesday.
BASE EFFECT
Favourable base effects have been one of the key reasons for CPI inflation falling in FY26 and the trend is expected to have continued in October. The base effect in October is such that if the general index remains unchanged from September, retail inflation would fall to 0.2%. The general index had risen 1.3% on month in October 2024.
An inflation rate of 0.3% in October would translate to a 0.1% rise in the overall index from September, which would be much lower than the average sequential rise of 0.8% seen in October in the last 12 years.
The moderate sequential rise in October is likely because of lower food prices, particularly vegetables, and also the reduction in retail prices following the GST rate rationalisation effective Sept. 22.
According to data from the Department of Consumer Affairs, retail prices of tomato and onion sequentially fell 8.5% and 3.5%, respectively, in October. Potato prices did, however, rise 1.0% from September. Economists at Nirmal Bang Institutional Equities expect food and beverage inflation to fall further to (-) 3.5% in October from (-) 1.4% in September.
"Food deflation likely deepened, given a sharp sequential decline in vegetable prices. In contrast, core inflation likely remained around 4.5%, partly buoyed by higher gold prices during the month," economists at ANZ said. "The divergence in headline and core inflation is here to stay, and the gap will likely narrow in Q2 2026."
Core inflation--which excludes volatile food and fuel items--in October is seen near September's two-year high print of 4.5%. Lower prices after the GST rate cut likely offset the impact of higher gold prices in October, keeping core inflation in check.
The following is a summary of the poll on CPI inflation in October:
| ORGANISATION | CPI INFLATION ESTIMATE |
| ANZ Bank | 0.2% |
| IDFC FIRST Bank | 0.2% |
| ICICI Securities Primary Dealership | 0.25% |
| HDFC Bank | 0.30% |
| Kotak Mahindra Bank | 0.3% |
| CareEdge Ratings | 0.3% |
| YES Bank | 0.32% |
| Societe Generale | 0.4% |
| Nirmal Bang Institutional Equities | 0.46% |
| QuantEco Research | 0.46% |
| ICRA | 0.5% |
| India Ratings and Research | 0.8% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vandana Hingorani
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