India's Inflation Rate Hits Record Low in October, Boosts Rate Cut Prospects
New Delhi, Wednesday, 12 November 2025.
India’s consumer inflation fell to 0.25% in October 2025, the lowest on record, aligning with RBI’s forecasts and increasing expectations for interest rate cuts to stimulate economic growth.
Economic Context and Inflation Dynamics
India’s consumer inflation fell to a historic low of 0.25% in October 2025, significantly below the 1.44% recorded in September and well under the projected 0.48% from a Reuters poll of economists. This development has aligned well with the Reserve Bank of India’s (RBI) forecasts, setting the stage for potential interest rate cuts aimed at stimulating economic growth [1][2].
Factors Behind the Inflation Decline
The decline in inflation is attributed to several factors, including a reduction in the goods and services tax (GST), favorable base effects, and a broad-based easing in prices across food and transportation categories. Notably, the food and beverage segment experienced a deflationary trend, with prices dropping by 3.7%, further contributing to the overall dip in consumer price index (CPI) inflation [2][3].
Implications for Monetary Policy
The Reserve Bank of India is now poised to reassess its monetary policy stance. Financial analysts predict that the sustained low inflation could lead to an accommodative monetary policy, potentially resulting in a 25 to 50 basis points cut in the repo rate during the December 2025 monetary policy meeting. Such a move would aim to support economic growth by reducing borrowing costs for consumers and businesses [1][4].
Broader Economic Impact
Despite the positive outlook for inflation, the Indian economy faces challenges from global trade uncertainties and domestic economic conditions. The recent imposition of a 25% tariff by the United States on Indian imports underscores these challenges. New Delhi’s response, including reducing GST on various items, aims to bolster domestic demand and cushion the economic impact [5].