India's Inflation Plunge: How GST Cuts Drove Historic 0.25% Rate

There is decrease of 119 basis points in headline inflation of October, 2025 in comparison to September, 2025.

Food inflation, a key parameter, declined to (-) 5.02 per cent in October, data showed. A decrease of 269 basis points is observed in food inflation in October, 2025 in comparison to September, 2025. The food inflation in October, 2025 is the lowest of the current CPI series.

The impact of reduction in GST was visible across all sectors.

The decline in headline inflation and food inflation during the month of October, 2025 is mainly attributed to full month's impact of decline in GST, favorable base effect and to drop in inflation of Oils and fats, Vegetables, Fruits, Egg, Footwear, Cereals and products, Transport and Communication etc, the ministry said in a statement.

"Going ahead, while the inflation trajectory is likely to remain benign, RBI will need to filter the festive and GST related demand from the cyclical recovery. We remain skeptical on the sustainability of the recent pickup in economic activity and hence see some room for further monetary easing," Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said.

Following are top five major states with high year-on-year inflation for the month of October, 2025:

Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well. The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time, before cutting it for the first time in about five years in February 2025.

Analysts expect inflation to remain under control, allowing the RBI to focus on supporting economic growth. The recent repo cuts were quite an indication.

"The MPC is likely to pare its CPI inflation projection for FY2026 further from 2.6% (as mentioned in October 2025 meeting), driven by the soft sequential momentum in food prices as well as the impact of the GST rate rationalisation on several items in the CPI basket," Aditi Nayar, Chief Economist, ICRA, said.

"This, along with the dovish tone of the October 2025 policy document, would support a 25-bps rate cut in the December 2025 policy review, unless Q2 FY2026 GDP growth surprises on the upside," Nayar added. "However, data releases in the run up to the policy meeting on December 5, 2025, including those on the Q2 FY2026 GDP, and October 2025 trade and IIP numbers, which are key to assess the impact of the US tariffs and GST rationalisation on growth, would also guide the policy decision. The December 2025 MPC review remains a close call, in our view."

- ANI