India's retail inflation rate in September 2025 dips to lowest since June 2017

That India's retail inflation rate has dipped below RBI's tolerance band of 2-6% increases the prospect of a repo rate cut to boost GDP growth amid US tariffs.

India's retail inflation rate in September 2025 fell to the lowest since June 2017 and below the Reserve Bank of India's tolerance band for the second time this year, strengthening the case for a repo rate cut as India's GDP growth faces pressure of 50% US tariffs.

the above-normal monsoon this year has boosted agricultural output and helped drive down food prices and, therefore, India's inflation rate. (Reuters)

The consumer price index, or CPI, rose 1.54% from a year earlier last month, data released by the Ministry of Statistics and Programme Implementation on Monday showed. That compares with 1.50% forecast by economists in a Bloomberg survey. The index had climbed 2.07% in August, marking the first acceleration in ten months.

This is also the first inflation reading since the government’s reduced the GST rate on hundreds of items—from soaps to small cars—in India's biggest tax overhaul since goods and services tax came into effect in 2017. Additionally, the above-normal monsoon this year has boosted agricultural output and helped drive down food prices.

A benign inflation rate increases the likelihood of RBI easing the repo rate at its next monetary policy meeting in December. That, after the central bank kept its benchmark interest rate unchanged earlier in October, but signalled that there may be room for easing.

And while India's GDP grew at its quickest pace in over a year in April-June, analysts expect the 50% US tariffs to weigh on annual growth for the rest of the fiscal.