India’s consumer inflation eased to 0.25% in October, raising expectations of further monetary easing by the Reserve Bank of India (RBI). The October figure came in below economists’ estimates of a 0.48% rise and was significantly lower than September’s 1.54% increase. Reflecting this trend, the RBI revised its inflation forecast for the fiscal year ending March 2026 down to 2.6% from 3.1%, while keeping its key policy rate steady at 5%.
The slowdown in headline and food inflation was largely driven by the GST cut, favorable base effects, and lower prices for oils and fats, vegetables, fruits, eggs, cereals, footwear, transport, and communication. RBI Governor Sanjay Malhotra noted that the effects of the 50-basis-point rate cut in June are yet to fully impact the economy, though the central bank warned growth could slow in the latter half of FY26 amid global trade uncertainties.
Recent U.S. tariffs of up to 50% on Indian imports, affecting textiles, jewelry, and marine products, could hit jobs and growth. To support domestic demand, India cut GST on multiple items in late September, benefiting sectors like autos, jewelry, FMCG, and textiles, with mixed demand recovery across other goods.
