Daijiworld Media Network - New Delhi
New Delhi, Oct 14: India witnessed a significant easing in both wholesale and consumer inflation in September, offering a welcome relief to households and policymakers alike. The Wholesale Price Index (WPI)-based inflation slipped to 0.13% in September, down from 0.52% in August, while Consumer Price Index (CPI)-based inflation hit an over eight-year low of 1.54%, according to official data released by the Ministry of Commerce and Industry and the Ministry of Statistics.
The steep drop in inflation is largely attributed to a broad-based decline in the prices of food items and fuels. WPI food inflation dropped by -1.38%, supported by higher agricultural yields and robust buffer stocks of essential grains like wheat and rice. Fuel inflation, too, remained in negative territory at -2.58%, reflecting lower prices of petrol, diesel, and natural gas.
On a monthly basis, wholesale prices fell by 0.19% in September compared to August. However, on a year-on-year basis, WPI remained marginally positive due to persistent price increases in manufactured goods, textiles, non-food articles, and transport equipment.
CPI inflation, which tracks the prices of goods and services from a consumer’s perspective, also recorded a sharp decline from 2.05% in August to 1.54% in September, the lowest since June 2017. This marks the fourth straight month of negative food inflation, which stood at -2.28%, with vegetables, edible oils, pulses, cereals, eggs, and fruits all seeing price corrections.
The inflation outlook for 2025–26 has turned more optimistic, bolstered by a favourable base effect, a healthy monsoon season, strong kharif crop sowing, adequate reservoir levels, and comfortable foodgrain buffer stocks. Additionally, GST rate cuts that came into effect on September 22 are expected to continue easing price pressures across a range of goods in the coming months.
This disinflationary trend provides the Reserve Bank of India (RBI) with greater flexibility to pursue growth-oriented policies. The Monetary Policy Committee (MPC) has already revised its inflation forecast for 2025–26 downward from 3.1% to 2.6%, citing the GST cuts and softening food prices.
RBI Governor Sanjay Malhotra noted that the rate rationalisation under GST will directly reduce prices of several CPI basket items. "Overall, the inflation outcome is likely to be softer than projected earlier, primarily due to the GST rate cuts and benign food prices," he stated.
The latest data reflects not only a temporary reprieve from inflationary pressures but also a broader shift in the economic landscape — one that may allow the central bank to consider interest rate cuts and liquidity infusion to stimulate growth in the near future.