Retail inflation dropped to series low of 0.25% in Oct

OThe record downtick in price pressures is likely to create room for the Monetary Policy Committee of the RBI to cut interest rates at its upcoming review in December, said most economists.

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October’s CPI is the final print before the MPC meets again from December 3 to December 5. After slashing the key interest rate by 100 basis points (bps) to 5.50 per cent between February and June, the MPC had kept interest rates unchanged for the second successive time at its last bimonthly review which concluded on October 1.

October’s near zero per cent inflation is far below the central bank's tolerance range of 2 per cent to 6 per cent. The Reserve Bank of India (RBI) has projected that inflation would average 1.8 per cent in Q3 FY26, the same as it had projected for Q2, when CPI had averaged 1.74 percent. The RBI had lowered its inflation projection for FY26 to 2.6 percent, with Q4 expected to average 4 per cent, but economists expect a downward revision in these projections.