GST effect: Consumer price inflation rose just 0.25% in October, lowest increase ever
Consumer prices rose a mere 0.25 per cent in October compared to the same month last year as the reduction in the Goods and Services Tax (GST) rates and a favourable base effect helped drive down the headline retail inflation rate to an all-time low, according to government data released on Tuesday. Rural inflation was in the negative territory for the first time ever, with overall consumer prices 0.25 per cent lower in October compared to last year. In urban areas, retail prices were up 0.88 per cent.
The previous all-time low for headline retail inflation was 1.46 per cent, recorded in June 2017. But that has now tumbled to the third-lowest spot, after the inflation print for September was revised downwards to 1.44 per cent from 1.54 per cent.
In addition to the GST rate cuts, inflation in October as per the Consumer Price Index (CPI) also moderated sharply from 6.21 per cent in October 2024 thanks to the favourable base effect as well as a decline in food prices, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed.
“The decline in headline inflation and food inflation during the month of October 2025 is mainly attributed to full month’s impact of decline in GST, favourable base effect and to drop in inflation of Oils and fats, Vegetables, Fruits, Egg, Footwear, Cereals and products, Transport and Communication, etc,” the Statistics Ministry said in a statement. Food inflation in October stood at (-) 5.02 per cent — also the lowest ever in the current CPI data series. The negative food inflation rate, or deflation, implies food prices in the retail market in October were 5 per cent lower compared to a year ago.
The fall in headline CPI inflation to close to zero was expected, with economists broadly predicting that it would fall below 0.5 per cent. Some expected it to come in as low as 0.2 per cent due to the lower GST rates that came into effect on September 22 following the GST Council’s decision in early September to collapse the four-slab indirect tax rate structure to just two tiers — 5 per cent and 18 per cent — and a demerit rate of 40 per cent rate for super luxury, sin, and demerit goods. The sweeping GST rate cuts were targeted at common-use items, including those in the food category.
