Overview
- Consumer prices rose 1.54% year on year in September, driven by a fourth straight month of food deflation with the Consumer Food Price Index at -2.28% and vegetables down about 21.4%.
- Disinflation was broad-based, with rural headline inflation at 1.07% and urban at 2.04%, while housing costs firmed and helped lift core inflation to around 4.5%.
- Wholesale inflation cooled to 0.13% in September as food articles fell further, including a roughly 24.4% year-on-year drop in wholesale vegetable prices, and fuel and power stayed in deflation at -2.58%.
- The RBI kept the policy rate at 5.5% on October 1, lowered its FY26 inflation projection to 2.6% and signalled scope for easing, and several analysts see room for a possible 25 bps cut in December.
- Lower prices reflect a strong base effect, improved food supplies and late‑September GST rate cuts, with analysts highlighting manageable risks from heavy rains in some regions, tariff moves and pass‑through uncertainties.