Winning Bizness Desk

Mumbai.India’s retail inflation has eased to a 99-month low of 1.54% in September 2025. This is the lowest level of inflation recorded since June 2017. The data, based on the Consumer Price Index (CPI), shows a significant decline from earlier months. The drop in inflation comes as prices of essential food items such as vegetables, pulses, and spices have reduced sharply over the past year. The steady decline in inflation is seen as a positive sign for the economy and is expected to support better purchasing power for consumers.

Inflation falls in both rural and urban areas

The reduction in inflation was witnessed in both rural and urban regions of the country. In rural areas, the inflation rate stood at just 1.07%, while urban areas recorded a slightly higher rate of 2.04%. This broad-based fall indicates that the drop in prices is being felt across different parts of the country. The falling prices of essential food items have benefited consumers across segments, helping ease the cost of living in both cities and villages.

RBI’s inflation target outperformed for 8 months

For the eighth consecutive month, inflation has remained below the Reserve Bank of India’s (RBI) target of 4%. This consistent performance is seen as a result of both market trends and the central bank’s effective monetary policies. Lower inflation is also likely to influence RBI’s future decisions on interest rates and economic planning. The central bank had earlier taken various steps to control inflation, including monitoring food supply and managing liquidity in the system.

Cheaper food items drive inflation decline

A major reason for the low inflation is the drop in prices of key food items. Vegetables have seen a price fall of over 21% in the last one year. Pulses became cheaper by more than 15%, and spices recorded a 3% decline. The overall inflation in the food and beverages category turned negative, with a reading of -1.37%. This sharp decline helped bring down the overall inflation figure. A good harvest, improved supply chains, and stable market conditions have contributed to this trend.

RBI revises inflation forecast for FY26

The Reserve Bank of India has cut its inflation forecast for the financial year 2025-26 for the second time. RBI Governor Sanjay Malhotra announced that inflation for FY26 is now projected at 2.6%. The central bank also reduced its estimates for the third and fourth quarters of the financial year to 1.80% and 4.00%, respectively. These downward revisions reflect RBI’s confidence in the current market trends and the likelihood of continued low inflation in the coming months.

Positive outlook for consumers and economy

The current inflation trend brings some relief to consumers who were earlier dealing with rising costs. Lower food prices are particularly helpful for households, especially those with lower income levels. From a broader economic point of view, stable and low inflation creates a good environment for economic growth, investments, and financial planning. With inflation under control, the country is better positioned to focus on growth and development in other sectors.

Key Highlights in a Nutshell:

1. Retail inflation drops to 1.54% in September 2025

2. Lowest inflation in 99 months, since June 2017

3. Urban inflation at 2.04%, rural at 1.07%

4. Food inflation turns negative at -1.37%

5. Prices of vegetables fall over 21%, pulses by 15%

6. RBI cuts FY26 inflation forecast to 2.6%

7. Inflation stays below RBI's 4% target for 8 months