In a significant relief to consumers and policymakers alike, India’s retail inflation fell sharply to 1.54% in September 2025, marking its lowest level since June 2017. According to the Ministry of Statistics and Programme Implementation, this drop is attributed to continued deflation in food prices and favorable base effects from the previous year. The figure represents a steep decline from the 2.07% inflation recorded in August 2025, signaling a sustained easing in price pressures, particularly in essential commodities.
Inflation Breakdown: Urban vs Rural
The decline in inflation was broad-based across geographies,
- Rural inflation stood at 1.07%, reflecting deeper price corrections in essential items.
- Urban inflation was recorded at 2.04%, slightly higher than rural but still significantly lower than the national average in previous months.
- This rural-urban divergence underlines the stronger disinflationary impact in agriculture-dominated regions.
Food Inflation Slips into Deflation
- The most striking contributor to the headline figure was the food inflation rate, which remained in negative territory for the fourth consecutive month.
- The All-India Consumer Food Price Index recorded a deflation of 2.28% in September, the lowest since December 2018.
- Food inflation in rural areas dropped to –2.17%, while urban areas witnessed a deflation of –2.47%.
This ongoing deflation in food items is primarily due to falling prices of,
- Vegetables
- Pulses
- Cereals
- Edible oils
- Fruits
Reasons Behind the Decline
The Ministry attributed this record-low inflation to two main factors,
- Favorable Base Effect: September 2024 witnessed a relatively high inflation base, making the 2025 numbers look more subdued in comparison.
- Sharp Drop in Key Food Prices: Prices of essential commodities like vegetables and cooking oils have seen consistent decline due to strong supply chains, improved crop output, and regulated distribution mechanisms.
Static Facts
- Retail Inflation (Sept 2025): 1.54% (Lowest since June 2017)
- Previous Month (Aug 2025): 2.07%
- Rural Inflation: 1.07%
- Urban Inflation: 2.04%
- Food Inflation (All-India): –2.28% (Lowest since Dec 2018)
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