Overview

• Official data show headline CPI at 1.54% in September, below the RBI’s 2%–6% band for the second time this quarter.
• Food prices fell 2.28% year on year with vegetables down 21.38%, while rural inflation was 1.07% and urban 2.04%.
• The RBI kept the policy rate at 5.5% in October, cut its FY26 inflation projection to 2.6%, and indicated scope to ease, with some analysts flagging a possible 25 bps cut in December.
• Core inflation is estimated near 4.5% on gains in categories such as housing and gold, underscoring risks from firm precious metals, potential tariff effects and global energy moves.
• GST rate reductions implemented in late September and a favorable monsoon and kharif output are expected to further temper October readings, with the next CPI due on November 12.