Easing prices of vegetables, pulses and cereals pull inflation to its lowest since 2017; RBI trims FY26 forecast to 2.6 per cent
India’s retail inflation eased sharply to 1.54 per cent in September 2025, the lowest in over eight years, as food prices continued to decline across key categories such as vegetables, pulses and edible oils, according to data released by the National Statistical Office (NSO) on Monday.
For comparison, the consumer price index (CPI) inflation stood at 5.49 per cent in September 2024, compared to 2.07 per cent in August.
“The decline in headline inflation nd 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 release.
Food Prices In Deflation
Food inflation, measured by the Consumer Food Price Index (CFPI), stood at –2.28 per cent year-on-year in September, compared to –0.64 per cent in August and 9.24 per cent in the same month last year. This is the fourth consecutive month of easing food inflation, largely supported by improved supply conditions and higher agricultural output.
The data shows that both rural and urban areas benefited from the moderation. Rural inflation eased to 1.07 per cent from 1.69 per cent in August, while urban inflation fell to 2.04 per cent from 2.47 per cent.
Non-food Components Remain Steady
While food prices softened, some non-food segments such as housing, health and education continued to see moderate price rises. Housing inflation rose to 3.98 per cent from 3.09 per cent in August, whereas health and education costs were marginally lower at 4.34 per cent and 3.44 per cent, respectively.
Fuel and light inflation also eased to 1.98 per cent, reflecting stability in domestic energy prices and global crude trends.
RBI Revises Forecast Downward
The Reserve Bank of India (RBI), in its October bi-monthly policy review, cut its inflation projection for FY26 to 2.6 per cent from 3.1 per cent estimated in August. The central bank cited positive agricultural trends and comfortable foodgrain reserves as key factors supporting a benign inflation outlook for the second half of the fiscal.
The RBI noted that the healthy progress of the south-west monsoon, higher kharif sowing, adequate reservoir levels, and sufficient buffer stocks “should help keep food prices contained.”
