India’s Inflation Falls to 1.54%, Lowest Since 2017; Food Prices Stay in Deflation for Fourth Month
SDG 1: No Poverty | SDG 10: Reduced Inequalities
Institutions: Ministry of Statistics and Programme Implementation
India’s headline inflation, measured by the All-India Consumer Price Index (CPI), cooled to 1.54% in September 2025, the lowest year-on-year level since June 2017. The decline of 53 basis points from August (2.07%) was driven largely by a continued fall in food prices, a favourable base effect, and easing in fuel and light inflation. This marks the fourth consecutive month of negative food inflation, a trend last seen in late 2018.
The Consumer Food Price Index (CFPI) recorded a year-on-year inflation of –2.28%, with rural and urban figures at –2.17% and –2.47%, respectively. The steep fall in food inflation—164 basis points lower than August—reflects significant corrections in prices of vegetables, oils and fats, fruits, pulses, cereals, eggs, and fuels. This broad-based easing has provided relief to households, particularly in rural areas where food forms a larger share of consumption.
In the rural sector, headline inflation dropped to 1.07% in September from 1.69% in August, while food inflation declined to –2.17% from –0.70%.
In the urban sector, headline inflation eased from 2.47% to 2.04%, with food inflation falling from –0.53% to –2.47%.
Non-food categories saw mixed trends:
Housing inflation: 3.98% (up from 3.09%) - compiled for urban sector only.
Education inflation: 3.44% (down slightly from 3.60%).
Health inflation: 4.34% (marginally lower than 4.40%).
Transport & communication: 1.82%, down from 1.94%.
Fuel & light: 1.98%, down from 2.32%.
Across states, CPI trends were uneven, according to MOSPI’s state-wise group indices. Food deflation was deepest in Punjab, Chhattisgarh, and Madhya Pradesh, where vegetable and cereal prices corrected sharply. Meanwhile, housing and service-related inflation remained high in large urbanised states like Maharashtra, Karnataka, and Delhi, reflecting structural cost pressures. The five states with the highest year-on-year inflation in September were Kerala, Karnataka, Haryana, Assam, and Maharashtra, though even in these, inflation remained moderate relative to earlier quarters.
The September data signals broad-based disinflation, anchored by sustained food price corrections and stable energy costs. For policymakers, this provides fiscal space to focus on growth revival and rural demand, while allowing monetary authorities to maintain an accommodative stance. However, the persistent rise in housing, health, and education inflation indicates that structural services inflation is replacing food inflation as a pressure point.
The state-level CPI pattern also underscores that India’s inflation is geographically differentiated, driven as much by regional logistics, local harvests, and administrative pricing as by national supply-demand dynamics. This calls for state-contingent inflation management tools, such as regional food buffer operations, urban rental monitoring, and targeted welfare support. With global commodity prices steady, the domestic inflation trajectory will hinge on the upcoming rabi crop, electricity tariffs, and core service prices.
What is CPI and CFPI? →
CPI (Consumer Price Index) tracks the average change in prices paid by consumers for a basket of goods and services (food, fuel, housing, education, health).
CFPI (Consumer Food Price Index) isolates the food component of CPI, capturing inflation in cereals, pulses, oils, vegetables, meat, and other edibles.
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