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Retail inflation dropped to just 1.54% in September, its lowest level since June 2017, helped by a sharp fall in food prices.
Breaking it down: the figure was slightly above expectations of 1.50% but a big drop from 5.49% a year ago. This is a sign that price pressures are easing faster than anyone thought.
- Food inflation stayed negative for the fourth straight month, coming in at (-)2.28% versus (-)0.69% in August.
- Vegetables were the biggest drag, with prices plunging 21.38% year-on-year, while pulses also fell 15.32%.
- Rural inflation eased to 1.07%, and urban to 2.04%, showing broad-based relief across regions.
The fall in inflation has been powered by better monsoon progress, higher kharif sowing, and healthy foodgrain stocks. While food prices are cooling, core inflation, which excludes food and fuel, inched up to 4.5%, hinting that services and housing costs still need watching.
For now, though, India’s inflation story finally looks like one worth smiling about.
Why it matters: for consumers, this means cheaper grocery bills and more spending power elsewhere. For the RBI, it’s a validation of its steady-hand approach, the central bank recently cut its inflation forecast for FY26 to 2.6%, signaling comfort with the current price trend.
