NewKerala.com

Key Points

India's inflation continues its downward trend with CPI projected at just 1.2% for September 2025. Food prices are driving this deflationary spiral, particularly tomatoes, onions, and potatoes which saw significant price corrections. The Bank of Baroda report notes robust arrival statistics for these vegetables have improved dramatically compared to last year. While some input costs are firming up, the immediate pass-through to consumer prices remains limited, keeping inflation expectations subdued.

Key Points: India's September CPI at 1.2% as Food Prices Continue Deflation

  • September CPI projected at 1.2% with favorable statistical base supporting decline
  • Tomato prices fell 8.3% while onions dropped 46.2% in September
  • Bank of Baroda Essential Commodities Index in deflation for fifth straight month
  • Core inflation excluding gold expected to remain between 3.1-3.5%
  • Robust vegetable arrivals up 10.3% this fiscal year compared to last
  • Input costs showing some firmness but limited pass-through to consumer prices
2 min read

September CPI to be at 1.2%, first 6 days of Oct also shows a deflationary trend: BoB Report

Bank of Baroda reports CPI inflation at 1.2% for September 2025 with deflation continuing into October, driven by sharp declines in tomato, onion, and potato prices.

"We expect CPI in Sep'25 to be at approx. 1.2 per cent - Bank of Baroda Report"

Mumbai October 8

Headline inflation is expected to ease further with the Consumer Price Index (CPI) projected at around 1.2 per cent for September 2025, aided by a continued decline in food prices, according to Bank of Baroda's latest Price Picture report. The report attributes the moderation to sustained deflation in essential commodities and a sharp correction in the prices of tomatoes, onions, and potatoes (TOP).

"We expect CPI in Sep'25 to be at approx. 1.2 per cent. It has also the advantage of a favourable statistical base. Headline CPI is largely experiencing a food driven downward spiral. This is supported by robust arrival statistics of TOP vegetables." noted the report

The Bank of Baroda Essential Commodities Index (BoB ECI) remained in deflation for the fifth consecutive month, falling by 1 per cent year-on-year in September and by a sharper 3.8 per cent in the first six days of October. Sequentially, the index also slipped 0.3 per cent month-on-month, reflecting easing price pressures across key food groups.

Tomatoes saw a notable correction with retail prices dropping 8.3 per cent in September, while onions and potatoes declined by 46.2 per cent and 30.9 per cent respectively. The fall was supported by buoyant arrivals and effective supply management. "Robust arrival statistics for TOP cumulatively have risen by 10.3 per cent in FYTD26 compared to a contraction of 15.4 per cent in the same period last year," the report noted

Favourable global food prices and GST rate cuts being passed on by automakers, FMCG firms, and e-commerce platforms have further reinforced disinflationary trends. BoB expect headline CPI to undershoot the Reserve Bank of India's forecast for FY26.

"Intermediate input cost is showing some stiffening. However, the immediate passthrough to CPI is limited." noted the report

At the same time, the report cautioned that while food prices remain soft, some firmness is visible in metals, minerals, and energy costs due to elevated tariffs. However, it said the pass-through of these input costs to consumer prices is limited. Excluding gold, core inflation is expected to stay within 3.1 per cent to 3.5 per cent.

However, with the harvest season ahead, food inflation risks are seen on the downside, particularly for vegetables. "The coming months will also be the month of harvest of all these crops, so arrivals are expected to be on the upside." the report added.

- ANI

Share this article:

Reader Comments

R
Rohit P
While lower inflation is welcome, I'm concerned about deflationary trends. This might affect farmers' incomes and rural economy. Need balanced growth, not just low prices.
S
Sarah B
As someone who tracks economic indicators regularly, this is excellent news! The RBI might consider rate cuts if this trend sustains. Good for home loan borrowers 🏠
A
Arjun K
The 46% drop in onion prices is massive! Last year we were paying ₹80-100 per kg, now it's around ₹30-40. This makes a real difference in monthly expenses for middle-class families.
M
Michael C
Impressive data analysis by Bank of Baroda. The detailed breakdown of TOP vegetables and their impact on overall inflation shows good monitoring of essential commodities.
K
Kavya N
Hope the government maintains this momentum with better supply chain management. The festive season is coming - Diwali shopping should be more affordable this year! 🪔✨

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50