Ms. Gupta also spoke about initiatives brought in by the RBI to disseminate data. She said that the balance of payments (BoP) data is soon expected to be released on a monthly basis. Photo: X/@PIBMumbai

The three-day closed-door Monetary Policy Committee (MPC) meeting, which commenced on Monday (September 29, 2025), has raised hopes of a rate cut.

The October policy comes within weeks of a cut in Goods and Services Tax (GST) and at a time when demand is likely to be created in the domestic market amid the tariff pressure.

Analysts are divided on whether the rate fixing panel would vote for a rate cut or maintain status quo, considering the positive impact of GST cut on GDP growth and to further control inflation.

According to Investment Information and Credit Rating Agency (ICRA), the MPC is likely to maintain status quo on the repo rate. This view is supported by the positive impact of GST reforms on demand, stronger-than-expected Q1 FY 2026 GDP growth, and an inflation trajectory that, while lowered due to GST rationalisation (FY2026 average now 2.6%), is expected to slope upwards thereafter.

“In ICRA’s view, the GST rationalisation could dampen the headline Consumer Price Index (CPI) prints by 25-50 basis points (bps) during Q3 FY2026-Q2 FY2027 relative to our pre-GST rationalisation estimates, taking the average for FY2026 to 2.6%,” said Aditi Nayar, Chief Economist, ICRA Ltd.

“While October-November 2025 may mark a fresh low for the CPI inflation, the trajectory subsequently remains upward sloping. GST rationalisation is unambiguously set to moderate inflation,” she said.

“However, this is the outcome of a policy change and will likely be accompanied by stronger demand. This suggests a status quo for the repo rate in the October 2025 policy review, in what appears to be a close call,” she added.

“While we do believe that there is limited scope for any change in the repo rate in this policy, there is a market view that given the current environment, a rate cut would be warranted,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

“As inflation is anyway well below the target of 4% both before and after GST 2.0, this cannot be a primary consideration. In fact, in Q1-FY27, inflation would be in the region of 4.3-4.4% and average 4-4.5% for the year which means that the real rate would be between 1-1.5% which is in accordance with this thumb rule,” he said.

“Also, growth is expected to steady and be upwards of 6.5% for the year and hence there is no imminent threat to this number even after taking into account the tariff effect. Under these conditions we expect a status quo,” he added.

According to him a change of stance could probably be considered to assuage sentiment and bond yields. “If at all at a later point of time there is a package for exporters against the backdrop of tariffs, a rate cut could be considered. We expect RBI to also revise downwards the inflation forecast but leave the GDP unchanged,” he said.

Barclays said the MPC would go for a 25 bps cut in October, alongside a ‘neutral’ stance.

“After a neutral pause in August, we see the RBI MPC cutting policy repo rate by 25 bps in the upcoming 1 October meeting, acknowledging that this is a close call versus a dovish pause, and deferring the cut to December,” the British bank said in a note.

“Our base case for an October cut is premised on comfort over inflation, which allows further monetary easing. The recent tightening of financial conditions and the tariff overhang clouding the growth outlook in the 12 – month ahead period are also reasons for a forward – looking central bank to cut rates,” it said.

“The tightening of financial conditions is also hindering transmission of policy easing to financial markets and bank lending rates. As for the stance, we expect the RBI MPC to retain it as ‘neutral’,” it added.

Master Capital Services Ltd. said, “Going by the aggressive rate cuts seen in the recent past, expectations for the coming RBI MPC meet are likely to be crafted in favour of policy stability rather than an immediate rate cut.”

“The headline inflation while slipping below the RBI’s 4% target band, is being seen as a temporary phenomenon, courtesy a sharp fall in vegetable prices, rather than a structural one. Also, considering global tariff moves and trade uncertainties also at play, the central bank may prefer to remain cautious for now,” the firm said.

“With interest rate cuts used as a stimulus tool on the domestic front through GST rationalisation, it provides RBI space to watch and assess the impact before considering fresh cuts,” it added.

Jyoti Prakash Gadia- Managing Director, Resurgent India (A SEBI Registered CAT 1 Merchant bank) said, “The inflation is under control, and there is likely a further reduction in prices with the recent major cut in GST rates on consumer products. This leads to a benign outlook on inflation, making a case for a rate cut of at least 25 bps at this stage.”

“The uncertainties caused by the tariff hike by the USA are likely to impact our experts’ performance, making a dent in GDP growth rates. This calls for a timely action to neutralise the negative impact and put extra emphasis on growth,” it added.

“The need for seizing this opportunity to support growth and likely favourable trends in prices is expected to weigh in favour of a rate cut by 25 bps,” it emphasised.

Published – September 29, 2025 11:10 pm IST

“An increase in headline inflation and food inflation during the month of August, 2025 is mainly attributed to an increase in inflation of vegetables, meat and fish, oil and fats, personal care and effects, and eggs,” the National Statistics Office said. Representational file image.
| Photo Credit: Reuters

Vegetable and pulses prices contracted 21% and 14% respectively, driven by a high base and falling prices. File.
| Photo Credit: Sushil Kumar Verma

Potato is one of the top five items which showed highest year-on-year inflation at All India level in December 2024 at 68.23%.
| Photo Credit: ANI

India’s retail inflation eased a bit to a four-month low of 5.22% in December 2024 from 5.5% in November 2024, with food inflation cooling marginally from 9.04% in November to 8.4% last month, the National Statistics Office said on Monday (January 13, 2025).

The top five items showing highest year-on-year Inflation at All India level in December 2024 are Peas (89.12%), Potato (68.23%), Garlic (58.17%), coconut oil (45.41%) and Cauliflower (39.42%), the NSO pointed out.

Overall consumer prices were 4.6% higher in December for urban residents compared to 4.9% in November, while rural consumers faced a steeper price rise of 5.8%, just marginally below the 5.95% recorded in the previous month.

On a month-on-month basis, the Consumer Price Index (CPI) was down 0.56% in December while the Consumer Food Price Index (CFPI) was 1.5% below November’s number. Urban consumers saw a much more marked decline here as well, with a 0.62% dip in their CPI and a 1.73% fall in the CFPI. By contrast, the rural CPI was down 0.5% and food prices dipped 1.3% sequentially.

While food inflation had also cooled to a four-month low, marking the second month of deceleration from October’s 15-month high of 10.9%, some critical food items reported faster upticks in prices. This included edible oils and fats, whose prices rose 14.6%, up from November’s 30-month peak inflation of 13.3%.

Vegetables inflation moderated at a slow pace from 29.3% in November to 26.6%, while Fruit prices accelerated again by 8.5% after easing to a 7.7% pace in November. Cereals inflation stood at 6.5% in December, from 6.9% in the previous month.

Pulses prices rose 3.8%, relative to 5.4% in November, marking the slowest inflation in over two years. However, other protein sources such as eggs (6.85%) and meat and fish (5.3%) reported higher inflation in December, while milk price rise was virtually unchanged at 2.8%.

Among non-food items, personal care and effects’ inflation eased a tad to 9.7% from 10.4% in November, while education inflation was unchanged at 3.9%. Health inflation inched up fractionally to 4.05% in December.

An official said that initiatives such as transportation through rail to various consuming centres from Maharashtra and the arrival of kharif onions in the market are likely to bring prices further down. File
| Photo Credit: The Hindu

As the prices of tomato, onion, and potato (TOP), the three essential vegetables in Indian households, remained high compared to last year, the Union government said in New Delhi on Thursday (November 14, 2024) that excess rainfall during this year has impacted the production of these commodities and pushed their prices upward. The Union Consumer Affairs Ministry also claimed that the price variation of the three items under the previous United Progressive Alliance (UPA) government was much higher when compared with the first 10 years of the Narendra Modi government.

The all-India average price of tomato, as on Thursday (November 14, 2024), was ₹52.35 for a kilogram; it was ₹39.2 per kilogram on November 14, 2023. In October, on the same date, the price of tomato was ₹67.5 for the same quantity.

Also Read: A vegetable triumvirate, inflation and the takeaway

In the case of potatoes, the prices were ₹37.48 for a kilogram on Thursday (November 14, 2024). Exactly one year ago, the price was ₹24.9 for a kilo, and the increase in one year is 50.52%. Last month, on the same date, the price was ₹37.08 for a kilogram.

An official of the Union Consumer Affairs Ministry said on Thursday (November 14, 2024) that the prices of tomato, onion, and potato are volatile due to seasonality in production and their susceptibility to climatic conditions. “The timely intervention by the government, such as the sale of tomatoes at a fixed price when the prices were surging and the release of onion buffer, have however helped in stabilising the prices of TOP, as is evident from the fact that on month-to-month variation as of November 13, the prices of tomatoes have declined by 21.4%, while the increase in prices of onions and potatoes has been brought down below the level of double digits,” the official said.

The official added that initiatives such as transportation through rail to various consuming centres from Maharashtra and the arrival of kharif onions in the market are likely to bring prices further down.

“The comparison in price variation of TOP during 2004-05 to 2013-14, and 2014-15 to 2023-24 indicates that there was a huge difference in the variation in prices growth. The price of tomato between the period 2004-05 and 2013-14 increased by 205.55%, whereas the increase was to the tune of  77.23% during 2014-15 to 2023-24. Similarly, during the same period, the retail price of onion experienced a growth of 291.38% as compared to 41.07%. The retail price of potato during 2004-05 to 2013-14 grew by 134% as compared to 0.01% during 2014-15 to 2023-24,” the official claimed, adding that the lower growth/variation in the prices of TOP during 2014-15 to 2023-24 is mainly on account of better price management by the government.

A scene at a vegetable market in Delhi.
| Photo Credit: SUSHIL KUMAR VERMA

India’s retail inflation stayed under the Reserve Bank of India’s median target of 4% for the second successive month in August, even as it inched up marginally to 3.65% from an upwardly revised 3.6% in July. August’s inflation pace is the second-slowest in five years.

Base effects from last August, when retail prices rose 6.8%, helped keep the inflation pace in check, but food inflation quickened from July’s 13-month low of 5.4% to 5.7% and crossed the 6% mark in rural India.

Overall rural inflation was more elevated than that faced by urban consumers, rising marginally from 4.1% in July to 4.16%, while urban inflation stood at 3.14% in August.

On a month-on-month basis, the Consumer Price Index (CPI) was flat, while the Consumer Food Price Index declined 0.44%. However, the rural food price index declined just 0.25% while urban food prices dropped 0.9% on a sequential basis.

Tomatoes reported the sharpest drop in prices, declining 47.9% year-on-year, and 28.8% on a month-on-month basis. The National Statistical Office said India’s food inflation for August is the second lowest since June, 2023.

Despite the respite on tomato prices, vegetable inflation shot back into double-digits to hit 10.7% after slipping to 6.8% in July. Spice prices fell 4.4% from last August, but pulse inflation stayed firm at 13.6% – marking the 15th straight month of 10%-plus price rise.

Prices of fruits rose 6.5%, while inflation in eggs rose to 7.14% from 6.8% in July. Cereals provided some relief, easing from over 8% to 7.3% in August.

Inflation in personal care and effects cooled to 7.94% in August from 8.44% in July.

Among the 22 States, including the erstwhile State of Jammu and Kashmir, that the NSO calculates inflation rates for, just seven States outpace the national average of 3.65%. Bihar clocked the sharpest inflation at 6.62%, followed by Odisha (5.63%), Assam (5.03%), Uttar Pradesh (4.9%), Haryana (4.12%) and Kerala (4.1%).

A fruit vendor tends to customers at a fruit and vegetable wholesale market in Mumbai, India, February 8, 2023.
| Photo Credit: Reuters

Retail inflation increased to 5.08% in June as kitchen items became dearer, according to government data released on July 12.

The Consumer Price Index (CPI) based retail inflation was 4.8% in May 2024 and 4.87% in June 2023 (previous low).

Inflation in the food basket was 9.36% in June, up from 8.69% in May, according to the data released by the National Statistical Office (NSO).

The government has tasked the Reserve Bank of India (RBI) to ensure that the CPI inflation remains at 4% with a margin of 2% on either side.

The RBI projected the CPI inflation for 2024-25 at 4.5%, with Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%.

The central bank mainly factors in the retail inflation while deciding its bi-monthly monetary policy.

(with inputs from PTI)