Analysts say October could mark the lowest inflation reading yet, with GST cuts and food price declines driving the slide
Retail inflation, measured by the Consumer Price Index (CPI), is expected to slip below 1 per cent in October as the full impact of the GST rate reduction begins to show. The official inflation print will be released on Wednesday, and some economists believe the figure could fall as low as 0.2 per cent. CPI inflation had stood at 1.5 per cent in September.
The inflation reading will be a crucial input for the Monetary Policy Committee (MPC), led by RBI Governor Sanjay Malhotra, which meets next month. With price pressures easing, analysts think the panel may consider trimming policy rates and could also revise its inflation forecast for the second half of the fiscal year.
The GST rate cut, implemented from 22 September, had a partial effect on September’s numbers, but a sharper impact is anticipated in the October data. Additionally, food prices have continued to decline, which is likely to further pull down headline inflation.
“The CPI inflation is expected to ease to a series low of 0.5 per cent in October 2025 from 1.5 per cent in September 2025, reflecting a deeper deflation in the F&B segment as well as the impact of the GST rate cut across several items in the CPI basket”, Aditi Nayar, Chief Economist at ICRA, said.
Radhika Rao, Executive Director and Senior Economist, DBS Bank, also expects inflation to hit a new low. She sees the October CPI number dropping to 0.2 per cent, which is the weakest in the current series, driven by further softening in food prices, the statistical base effect, and recent indirect tax reductions. “Food disinflation is likely to deepen as high-frequency trends pointed to a correction in perishables, pulses, cereals etc”, she said.
Rao added that the easing effect from the GST cut should be more fully visible in October, though core inflation could stay firm due to costlier precious metals before moderating in November. She noted that October is likely to mark the bottom of the inflation cycle, with readings expected to inch up again as base effects fade.
However, she cautioned that unexpected rainfall could disrupt the supply of perishable foods in the short term. “This, alongside an increase in import duties on selected pulses, reinforces our view that the bulk of the disinflation in food is likely behind us,” Rao said. She expects the government to deploy administrative measures to stabilise supplies and prevent price spikes.
Economists also anticipate the MPC to tweak its inflation outlook in the upcoming policy review. “We expect the MPC to revise its CPI inflation projections for H2 FY2026 downwards once again, when it meets in December 2025, taking the average for FY2026 to 2.4 per cent from its current forecast of 2.6 per cent”, Nayar said.
