India's Retail Inflation decreased to 1.54% in the month of September. This is the lowest retail inflation rate in over 8 years. This drop becomes relaxing for Indians as the same figure for the month of August was 2.07%.
How Much Has Retail Inflation Decreased?
According to the data from the government of India, this is the second time in 2025 that retail inflation has stayed under 2 percent. This stability means that the rate at which the price of consumer goods is rising is slow, which does not pinch the pockets of people. Moreover, the data also showed that the retail inflation in August boiled down to an 8-year low of 1.61 percent. This is attributed to a decrease in food and fuel prices.
"The CPI inflation eased to a 99-month low of 1.5 percent in September 2025, pulled down by a sharper-than-anticipated disinflation in food and beverages to 1.4% (81-month low), despite several other categories recording a sequential uptick in YoY inflation prints. For instance, inflation for miscellaneous items shot up to 5.35 percent in September 2025, boosted by the surge in prices of gold and silver," said Aditi Nayar, chief economist, Icra. Despite the stagnation in the retail inflation rate, many industry experts are predicting that there will not be at rate cut announcements by RBI.
What Do Banks Predict on Rate Cuts?
“Overall, the benign inflation and growth trajectory does provide room for 25-50 bps rate cuts. However, the festive-linked surge in retail sales may make it difficult to gauge the underlying sustainable demand in the economy, and hence the timing of easing may become more difficult,” Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, said.
Whereas HDFC Bank said that since inflation is below the RBI’s target, there is space for another 25-50 bps of rate cuts. However, further rate cuts could be delivered only if growth momentum weakens significantly, and tariff risks continue to loom. “In our base case, we expect no further rate cuts from the RBI. However, if downside risk to growth emerges, we could see the policy rate inch towards 5 per cent by FY26,” it said.