India’s Inflation Rate Hits 8-Year Low of 1.54% in September 2025
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New Delhi, Oct 13 (TheTrendingPeople.com): India’s retail inflation, measured by the Consumer Price Index (CPI), has fallen to an over eight-year low of 1.54 per cent in September 2025, driven by falling food and fuel prices. The data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday shows that this is the lowest inflation recorded since June 2017, reflecting a period of sustained price stability in the economy.
The CPI inflation stood at 2.05 per cent in August 2025, marking a steady decline that has now reached new lows. Economists attribute this decline to a combination of a favourable base effect, stable fuel prices, and a broad moderation in food inflation.
Food Prices Drive Down Inflation
According to the official figures, food inflation remained negative for the fourth consecutive month, recorded at -2.28 per cent in September. This continued trend of deflation in food prices has significantly contributed to the overall decline in headline inflation.
The Ministry stated that the “decline in headline inflation and food inflation during September is mainly attributed to a favourable base effect and the fall in inflation of vegetables, edible oils, fruits, pulses, cereals and eggs. Besides, fuels also turned cheaper during the month.”
The drop in food prices has been supported by a good southwest monsoon and healthy kharif sowing, which boosted agricultural output and stabilized food supply. Additionally, adequate reservoir levels and sufficient buffer stocks of food grains have ensured that prices remain under control, particularly in rural markets.
Impact of GST Rate Cuts and Government Measures
Another significant factor contributing to the decline in inflation has been the rationalisation of GST rates implemented on September 22, 2025. The move reduced tax rates across a range of goods, directly lowering prices for consumers.
The RBI’s Monetary Policy Committee (MPC), which met earlier this month, took note of these trends and adjusted its inflation outlook accordingly. The committee reduced its forecast for the financial year 2025–26 from 3.1 per cent to 2.6 per cent, citing the impact of GST cuts and benign food prices.
RBI Governor Sanjay Malhotra, while addressing journalists after the MPC meeting, said,
“The recently implemented GST rate rationalisation would lead to a reduction in prices of several items in the CPI basket. Overall, the inflation outcome is likely to be softer than what was projected in the August monetary policy committee resolution, primarily on account of the GST rate cuts and benign food prices.”
He further added that the “overall inflation outlook has turned even more benign in the last few months,” pointing to a period of stability that gives the central bank greater flexibility in managing monetary policy.
RBI’s Policy Response and Economic Implications
The decline in inflation gives the Reserve Bank of India (RBI) more room to continue with a soft monetary policy, which could involve interest rate cuts or other liquidity measures aimed at stimulating economic growth.
Governor Malhotra noted that “the current macroeconomic conditions and outlook have opened up policy space for further supporting growth,” indicating that the RBI is prepared to take steps to boost demand and investment in the coming quarters.
Economists believe that a sustained period of low inflation will benefit consumers through lower borrowing costs and stable prices for essential commodities. At the same time, it will encourage private investment by reducing input cost pressures on businesses.
Inflation Trends Over Recent Months
Data from MoSPI shows that headline CPI inflation had already touched an eight-year low of 1.6 per cent in July 2025, before marginally rising to 2.1 per cent in August, marking the first increase after nine consecutive months of decline. The continued moderation in food inflation from its October 2024 peak has been a key driver of this trend.
Inflation in the fuel group remained stable in the 2.4–2.7 per cent range between June and August, reflecting the global softness in crude oil prices. Meanwhile, core inflation—which excludes food and fuel—was recorded at 4.2 per cent in August, remaining largely contained. Excluding precious metals, core inflation stood at 3.0 per cent, further confirming the broad moderation in price pressures.
Outlook for 2025–26: A Stable Price Environment
Analysts expect the inflation rate to remain subdued in the near term, given the strong supply-side conditions and policy measures in place. The favourable monsoon, adequate buffer stocks, and continued tax relief through GST reforms are all expected to keep inflation below the RBI’s target range for the coming quarters.
Moreover, the global commodity market has remained largely stable, with oil prices easing and supply chains showing signs of improvement after years of volatility. These external factors, combined with domestic stability, provide a strong foundation for India’s low-inflation growth phase.
The RBI’s latest projections suggest that inflation will likely average around 2.6 per cent for the current financial year, marking one of the most stable price periods for the Indian economy in recent history.
Economic Experts on the Inflation Decline
Market analysts have welcomed the decline, stating that it reflects a well-coordinated policy approach between the government and the RBI. According to experts at the Centre for Monitoring Indian Economy (CMIE), the benign inflation numbers will likely boost consumer confidence and spending, particularly in rural areas where purchasing power had been constrained.
They also noted that India’s low inflation stands out globally at a time when many major economies are grappling with persistent price pressures. This comparative advantage could further enhance India’s investment climate and attract foreign capital.
Final Thoughts from TheTrendingPeople.com
India’s record-low inflation in September 2025 marks a major turning point for the economy. A combination of favourable weather, stable fuel prices, and policy measures such as GST rate cuts has eased the burden on consumers and businesses alike. As the RBI prepares to leverage this opportunity to stimulate growth, the outlook for 2025–26 appears optimistic.
A low-inflation environment not only strengthens household purchasing power but also creates space for sustained economic expansion — a positive sign for India’s financial stability and growth trajectory in the coming years.