In its October bi-monthly monetary policy, the Reserve Bank lowered its inflation projection for 2025-26 to 2.6 per cent from 3.1 per cent estimated in August.
Year-on-year retail inflation slipped to 1.54 per cent in the month of September from 2.07 per cent in the preceding month, mainly due to subdued prices of food items, including vegetables and pulses, according to government data released on Monday. The consumer price index (CPI) based inflation was 5.49 per cent in September 2024.
“The decline in headline inflation and food inflation during September 2025 is mainly attributed to favourable base effect and decline in inflation of vegetables, oil and fats, fruits, pulses and products, cereal and products, egg, fuel and light,” the National Statistics Office (NSO) said in a statement.
Year-on-year food inflation
Year-on-year food inflation during September 2025 was (-) 2.28 per cent compared to (-) 0.64 per cent in August and 9.24 per cent in September last year.
In its October bi-monthly monetary policy, the Reserve Bank lowered its inflation projection for 2025-26 to 2.6 per cent from 3.1 per cent estimated in August.
Regarding the inflation outlook for the second half of the fiscal year, RBI said that healthy progress of the south-west monsoon, higher kharif sowing, adequate reservoir levels and comfortable buffer stock of foodgrains should keep food prices benign.
Major relief for RBI
The drop in inflation has provided a major relief to the Reserve Bank of India (RBI). Recently, during its bi-monthly monetary policy review in October, the RBI reduced its inflation forecast for the fiscal year 2025-26 to 2.6 per cent from the previously estimated 3.1 per cent in August.
Will Boot Economy
The good progress of the southwest monsoon, increased sowing of the Kharif crop, adequate water levels in reservoirs, and good food grain stocks will help keep food prices under control. Analysts believe that this significant decline in inflation could provide the RBI with more scope to adopt a softer stance on policy rates in the future, further boosting the economy.
