India October inflation matches RBI outlook, easing hopes for rate cuts
A man pushes a cart inside a supermarket in Mumbai, India, on September 7, 2025. (Photo: Indranil Aditya/NurPhoto via Getty Images)
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India’s consumer inflation fell to 0.25% in October, raising hopes of further policy easing from the Reserve Bank of India.
The headline inflation figure fell short of forecasts for a 0.48% increase and eased further from the 1.54% recorded in September, according to a Reuters survey of economists.
In October, the central bank revised its inflation forecast for the fiscal year ending March 2026 from 3.1% to 2.6%, but kept the key policy rate unchanged at 5.
According to the statement, the decline in headline inflation and food inflation in October is mainly attributed to the impact of the decline in GST (goods and services tax), positive base effect and the decline in inflation of oils and fats, vegetables, fruits, eggs, footwear, grains and products, transport and communications.
Governor Sanjay Malhotra said that the effects of the 50 basis point major interest rate cut made by the Reserve Bank of India in June have not yet been reflected in the economy, and added that the decision to keep interest rates constant was taken unanimously.
However, the RBI also hinted that the Indian economy’s “growth will slow down” in the second half of fiscal 2026 due to global trade uncertainties.
In August, the US imposed a 25% tariff on imports from India, raising total duties to 50%; This is one of the highest rates Washington charges its trading partners. Textiles, precious stones and jewelery and seafood were the hardest hit.
Although exports to the US account for about 2% of India’s GDP, these sectors are labour-intensive. Prolonged weakness can lead to job losses and negatively impact overall growth.
To cushion the blow, New Delhi reduced goods and services tax on several products on September 22, stimulating domestic demand ahead of the month-long festive season and reducing prices of consumer goods, vehicles and agricultural products.
Indian broker Motilal Oswal said in a Nov. 7 research report that the automobile and jewelery sectors performed well, while there was a mixed increase in demand for shoes, paints, fast moving consumer goods and textiles.
