India's inflation likely eased to 0.4–0.6% in October amid softer food and commodity prices

India’s retail inflation is expected to ease sharply and settle between 0.4 per cent and 0.6 per cent in October 2025, according to a recent report by Bank of Baroda (BoB). The report attributes the continued fall to easing global commodity prices, steady supply conditions, and the government’s Goods and Services Tax (GST) rate rationalisation.

India’s overall Consumer Price Index (CPI) inflation stood at 1.54 per cent in September 2025, marking the lowest level in eight years. This was down from 2.07 per cent in August 2025, with food inflation dropping to –2.28 per cent year-on-year - the lowest since June 2017. The downward trend, BoB said, reflects both a favourable base effect and softening prices of key essential items.

Essential commodities see broad-based decline

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BoB’s Essential Commodities Index (ECI), which tracks prices of everyday goods, recorded a steep 3.6 per cent year-on-year fall in October 2025 - the sharpest since the index was introduced. The slide extended into November, with a further 3.8 per cent decline as of November 6, 2025.

Vegetable prices led the fall, particularly in the case of the “TOP” crops - tomato, onion and potato. Onion prices fell 51.2 per cent year-on-year in October, the steepest decline since December 2020. Tomatoes and potatoes saw prices drop by 39.9 per cent and 31.3 per cent, respectively. The report attributed this trend to healthy arrivals in wholesale markets, which have helped stabilise supplies.

Among other essentials, pulses - especially tur dal - recorded a 29.4 per cent year-on-year decline, the largest since January 2018. Edible oil prices also eased, reflecting lower international quotations.

On a month-on-month basis, the ECI slipped 0.1 per cent in October, mirroring the broader decline. However, potato prices rose slightly over the previous month, ending a two-month downtrend.

Easing prices signal steady inflation outlook

The continued fall in key food and commodity prices points to a comfortable inflationary environment in the months ahead, BoB noted. It said the broader trend indicates that consumer prices may remain stable for the rest of the year, provided supply chains stay smooth and weather conditions remain favourable.

The report also highlighted that the government’s GST rationalisation measures have begun to show results, with indirect tax adjustments helping keep inflation in check. The moderation in international oil and edible-oil prices has further reduced cost pressures across sectors.

Impact on policy and economy

With inflation now well below the Reserve Bank of India’s target range of 2–6 per cent, the focus shifts to maintaining this stability without disrupting growth momentum. A sustained period of low inflation could create space for fiscal adjustments and improve purchasing power at the household level.

India’s inflation performance stands out globally, as several major economies continue to grapple with higher price pressures despite moderating commodity trends. The contrast underscores India’s effective supply-side management and timely fiscal measures that have supported price stability.

At the same time, Bank of Baroda’s report cautioned that price volatility in perishable items remains a risk. Any sudden surge in vegetable or crude oil prices could reverse the current disinflationary trend. The official CPI data for October 2025 will be released by the Ministry of Statistics and Programme Implementation on November 12. If the projections hold, India could record its lowest inflation rate in the current CPI series, marking a rare phase of sub-1 per cent inflation.