India’s Retail Inflation Falls To Over 8-Year Lows In September

India’s annual retail inflation fell to 1.54% in September from 2.07 % in August, and marked the lowest year-on-year (YoY) inflation since June 2017. It was boosted by a drop in food inflation.

Food inflation dropped to -2.28% in September, the lowest since December 2018. It was -0.64 in the previous month. It remained negative for the fourth consecutive month.

The CPI inflation has dipped below the lowest range of the Reserve Bank of India’s mandate. 

The fall in headline and food inflation in September is primarily due to a favorable base effect and a drop in the prices of vegetables, oils and fats, fruits, pulses and related products, cereals and products, eggs, and fuel and light, according to a press release by the Indian government on October 13.

Vegetable prices reduced, with inflation at -21.38% compared to -15.92% last month. Pulse inflation decreased slightly to -15.32, against -14.53% in August. 

Inflation was lower across both rural and urban areas. Rural inflation fell to 1.07% in September from 1.69% last month, while urban inflation came in at 2.04%, down from 2.47% last month. Fuel and light inflation eased to 1.98% from 2.32% in August.

CPI Well Below RBI Estimates

Earlier this month, the Reserve Bank of India (RBI) maintained the repo rate at 5.50%, raised FY26 GDP growth estimates to 6.8% from 6.5%, and revised the FY26 CPI inflation forecast lower to 2.6% from 3.1%. The central bank cited the impact of the GST reform and a more-than-expected decline in food prices as the primary reasons for the revision.

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