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Context:
India’s retail inflation fell sharply to an eight-year low of 1.54% in September, falling below the lower tolerance limit of the Reserve Bank of India’s 2-6% target band. The fall is primarily driven by lower food prices.
Key Highlights:
- Retail inflation (CPI-based): Fell to 1.54% in September 2025, the lowest in over eight years.
- Comparison:
- June 2017: 1.46% (last time inflation was lower)
- August 2025: 2.1%
- July 2025: Below 2%
- The current inflation rate is below RBI’s lower tolerance limit of 2%, set under its monetary policy framework (2%-6%).
Drivers of Decline:
- Food and beverages inflation: Contracted 1.4% in September, versus +0.05% in August and +8.4% in September 2024.
- Fuel prices: Continued to ease, further reducing the inflationary pressure.
Retail Inflation
Retail inflation measures the increase in prices of goods and services purchased by households over a period of time. It is commonly calculated using the Consumer Price Index (CPI). It reflects how the cost of living changes for consumers. A rise in retail inflation means that everyday items like food, clothing, and fuel are becoming more expe
