India’s CPI Eases To 1.54% In Sept As Vegetables Prices Fall; A Rate Cut Ahead?

India CPI Inflation Data: The Consumer Price Index (CPI) inflation cooled down to 1.54% in September as the Goods and Services Tax (GST) rate cut and cheaper vegetable prices offered some ease, as per the CPI Inflation data for September 2025 released by the Ministry of Statistics & Programme Implementation on Monday, October 13.

India's CPI inflation, aka retail inflation, stood at 2.07% in August. Meanwhile, the stellar gold price rally continued to impact the core inflation. The headline inflation in September stood at 1.54%, which is the lowest since June 2017. Whereas food inflation remained negative for the fourth consecutive month in September.

Decline in September headline inflation has coincided with the Reserve Bank of India's Monetary Policy Committee (MPC) decision to keep repo rate unchanged at 5.5% with a neutral stance. However, the RBI MPC had lowered its CPI inflation forecast for FY 2025-26 to 2.6%, down from 3.1%.

In August, India's retail inflation stood at 2.07%, up from 1.61% in July. This increase was mainly due to higher prices for vegetables, meat, and fish. Although food inflation remained negative, some improvement was noted.

The stellar gold price rally continued to impact the core inflation. The headline inflation in September stood at 1.54%, which is the lowest since June 2017. Whereas, food inflation remained negative for the fourth consecutive month in September.

Decline in Food Inflation

There was a decline in food inflation during the September month supported by favourable base effects and cheaper vegetables, oil and fats, fruits, pulses and products, cereal and products, egg, fuel and light, etc.

Rural, Urban Inflation

There was a sharp decline in rural inflation as well as it declined to 1.07% in September compared to 1.69% recorded in August. Food inflation in the rural sector remained in negative territory at -2.17% in September, compared to -0.7% recorded in August this year. Urban inflation also saw a reduction, dropping to 2.04% in September, from 2.47% recorded in August 2025. Just like rural food inflation, costs of vegetables and other edible items declined in September.

Surge in Housing Inflation

Out of all the sectors, housing inflation increased in September compared to previous month. It stood at 3.98% in September, compared to 3.09% in August. The housing index is compiled for urban sector only. Meanwhile, education inflation saw some consolidation to 3.44% in September against 3.6% in August. Health inflation also cooled down to 4.34% in September, against 4.4% in August.

In rural areas, overall inflation increased to 1.69% in August from 1.18% in July. Food inflation also improved, moving from -0.7% to 1.74%. Urban areas saw retail inflation rise significantly to 2.47%, up from 2.10%, driven by rising food prices, although education and health costs eased.

RBI Lowers CPI Inflation For FY26

The headline inflation fell in July, but saw some surge in August. As CPI inflation has again lowered close to its record low mark, the RBI has mentioned that the inflation may ease further driven by a steep prolonged 9-month food price decline of 10.5%, the longest in the CPI series.

Milder summer temperatures further eased seasonal price pressures, keeping realised inflation below expectations in Q1 and Q2 FY 2025-26. GST rate rationalisation from September 22, 2025, has simplified taxes and lowered consumer prices, directly impacting around 11.4% of the CPI basket across product groups.