India’s September Retail Inflation Lowest Since 2017; Core Rises to 4.5%

India’s retail inflation eased to 1.54% in September 2025, the lowest print since June 2017. The Consumer Price Index-based inflation was at 2.07% in August. The Reserve Bank of India has already indicated space for cutting interest rates and the latest inflation print will help its case.

During the October 1 policy review, the RBI had left its repo rate unchanged at 5.50% but Governor Sanjay Malhotra had made clear that the pause was tactical, not terminal. “The current macroeconomic conditions and the outlook have opened up policy space for further supporting growth,” he had said.

With the September data, CPI for the July–September quarter averaged 1.7%, marginally below the Reserve Bank of India’s projection of 1.8%. Earlier this month, the RBI revised down its full-year inflation forecast for FY26 to 2.6% from 3.7%, citing soft food prices and the impact of GST rate rationalisation. 

Food inflation was at -2.28% in September compared with -0.69% in August. The decline was led by lower prices of vegetables, pulses, oils and fats, fruits, cereals, and eggs. Fuel and light inflation also moderated to 1.98% from 2.32%, while transport and communication inflation eased to 1.82% from 1.94%. These factors, along with a favourable base effect, contributed to the sharp decline in headline inflation.

Some items, however, continued to show stubborn inflation. Prices of mustard and refined oil rose over 20%, and that of gold and silver over 40%. Prices of copra, which is made from coconut, were up nearly 74%, keeping inflation in Kerala highest among states at 9.05%. The wight for copra is high for calculating inflation Kerala, due to its widespread use in the state. 

Despite broad disinflation, certain categories continued to show firmness. Core inflation, which excludes volatile food and fuel components, rose to 4.5% in September from 4.1% a month earlier, reflecting mild pressure in non-food, service-oriented segments. Core inflation rose to highest level since August 2023.

However, the central bank has been quick to point out that the core inflation minus gold is still benign