October CPI inflation dropped to 0.25%, and Food inflation declined to -5.02%. The government noted that CPI data indicates the impact of the reduction in GST is visible across all sectors.
Retail inflation was the lowest on record in the current data series, which began in 2015 and uses 2012 as a reference point for price levels. The CPI inflation was 1.4% in september and 6.21 in October last year.
Here is a detailed analysis of the implications and outlook for the economy going forward.
‘GST reforms impact’- PHDCCI
Rajeev Juneja, President, PHDCCI, stated that the GST reforms are having a favourable impact on the economy, as reflected in the softening of headline inflation, along with the base effect.
“Over the next two quarters, we anticipate that India’s inflation will stay within a manageable range on the back of sufficient food supply, reasonable energy prices, and the Reserve Bank of India’s strategic monetary management”, Juneja added.
‘Gold driven volatility to continue’- Bank of Baroda
Dipanwita Mazumdar, Economist at Bank of Baroda, said that the CPI got a sigh of relief in October, broadly led by food. She added that the major hand-holding came from a sharper pace of vegetable deflation, and CPI excluding vegetables is also at its lowest since Sep-19 at 3%.
“For core inflation, we expect the usual gold driven volatility to continue. Excluding gold, core got the comfort of lower inflation in categories where GST rate cut has taken place such as clothing and footwear and selected items of household goods and services. Nov’25 is expected to show the fuller impact of pass through. For now, we expect CPI to undershoot RBI’s target of 2.6% for FY26.” Mazumdar adds
‘F&B driving the decline’- ICRA
Aditi Nayar, Chief Economist at ICRA, stated that the dip was largely driven by the F&B segment, with deflation in this segment widening to 3.7% from 1.4% in the previous month.
“Among the other items, the miscellaneous segment witnessed an uptick in its YoY inflation prints to a 31-month high of 5.7% in October 2025, largely led by gold. Core inflation (CPI excluding F&B, F&L, and petrol and diesel for vehicles) remained unchanged at 4.5% with the impact of the GST rationalisation getting dulled by the spike in gold and silver prices during the festive season.” Nayar added.
Adding on RBI’s next move on rate cut, Nayar said, “The MPC is likely to pare its CPI inflation projection for FY2026 further from 2.6%, driven by the soft sequential momentum in food prices as well as the impact of the GST rate rationalisation on several items in the CPI basket. This, along with the dovish tone of the October 2025 policy document, would support a 25-bps rate cut in the December 2025 policy review, unless Q2 FY2026 GDP growth surprises on the upside.”
‘Food inflation to remain moderate’- CareEdge
Rajani Sinha, Chief Economist at CareEdge Ratings, expects food inflation to remain at moderate levels, backed by healthy agricultural activity and a favourable base. However, Sinha warns that late withdrawal of the monsoon and crop damage amid heavy rains in certain regions could pose some risk
“Going forward, inflation is projected to average 0.9% in Q3 before rising to 3.1% in Q4 FY26. With food inflation subdued, we project average inflation for FY26 at 2.1%. From a monetary policy perspective, moderating inflation provide the RBI with greater room to focus on supporting economic growth, in midst of continued external headwinds and uncertainties.” Sinha said.