Retail inflation hits record low of 0.25%, Pg1

Key Highlights:

• Retail inflation hit a record low of 0.25% in October 2025.
• The government attributes this to the full impact of GST rate cuts, a favourable base effect, and a drop in food item inflation.
• This is the lowest rate of inflation since January 2012, based on the current Consumer Price Index (CPI) series.
• Food and beverage prices contracted by 3.7% in October 2025.

Detailed Insights:

• The fall in overall inflation is largely due to the statistical impact of the base effect on food inflation.
• Most CPI categories saw higher inflation in October 2025 compared to October 2024, except for food and beverages.
• Food and beverage prices have contracted in four out of the seven months of this financial year.
• The decline is attributed to the impact of reduced Goods and Services Tax (GST) rates and a drop in inflation of oils, fats, vegetables, fruits, and other items.
• Economists suggest the decline is primarily due to a statistical base effect rather than an actual fall in prices, as food inflation was high in October 2024.
• Inflation in the fuel and light category stood at 2% in October 2025, compared to a contraction of 1.7% in October 2024.

Key Concepts Involved:

• Retail Inflation: The change in the price of a basket of goods and services that are typically purchased by households.
• Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
• Base Effect: The impact that the rise in price levels in the previous year (the base) has on the present year’s inflation rate.
• Goods and Services Tax (GST): An indirect tax for the entire country on the manufacture, sale, and consumption of goods and services.