India’s Inflation Hits a Record Low of 0.25%, Marking a Significant Easing Trend

India’s inflation trajectory has undergone a remarkable transformation over the past year, culminating in a record-low Consumer Price Index (CPI) inflation of just 0.25% in October 2025. This marks one of the sharpest disinflationary phases seen in the economy in recent years. What began as a gradual decline in late 2024 has now evolved into a broad-based cooling of price pressures nationwide.

Headline CPI Cools Sharply from 6%+ to Near Zero

In late 2024, headline CPI was persistently above the 6% threshold, driven primarily by elevated food and fuel costs. However, through 2025, inflation has shown a consistent downward trend, supported by:

• Normalisation of supply chains
  
  
• Better crop output and improved food availability
  
  
• Stabilising input costs
  
  
• Government interventions in essential goods
  
  

By October 2025, the CPI reading fell to 0.25%, indicating a near-complete easing of price pressures across urban and rural regions. The steady moderation month after month showcases the strength of the ongoing disinflation cycle.

Food Inflation Turns Deeply Negative, The Biggest Driver

Food inflation, which had once surged to 10–11%, has seen the most dramatic reversal. As the data shows:

• Food inflation has moved into deep negative territory,
  
  
• Rural and urban food price trends have nearly converged,
  
  
• Supply-side improvements and controlled market interventions have quelled earlier price spikes.
  
  

This sharp fall in food inflation is the primary catalyst behind the overall easing seen in headline CPI. Even the brief uptick around Aug–Sep 2025 was short-lived and failed to disrupt the broader moderating trend.

Rural–Urban Inflation Gap Narrows Significantly

A notable feature of the current inflation cycle is the uniform cooling across India:

• Urban and rural inflation levels have almost fully converged
  
  
• Price moderation is no longer concentrated in a few categories.
  
  
• Disinflation is broad-based across goods and services
  
  

This uniformity strengthens the case for sustained low inflation in the near term.

What This Means for Investors

The implications for markets are significant. With inflation anchored near zero, the macro environment becomes increasingly favourable for:

1. Rate-Sensitive Sectors

Lower inflation reduces the pressure on monetary policy, potentially paving the way for an accommodative stance by the RBI. Sectors such as banking, real estate, automotive, and consumer durables stand to benefit.

2. Stronger Credit Growth

Falling price pressures lift real incomes and support higher borrowing and spending. Banks and NBFCs could see healthy advances in growth as credit demand expands.

3. Long-Duration Equities

Low inflation creates a stable interest-rate environment, supporting valuations for sectors like technology, utilities, and capital-intensive industries.

4. Improved Market Sentiment

With inflation no longer a macro headwind, risk sentiment strengthens, encouraging broader market participation.

Outlook: Inflation Headwinds Are Fading

With food prices stabilising and broader disinflation trends firmly in place, India’s inflation environment appears structurally improved. Unless unexpected supply shocks emerge, CPI is likely to remain benign, giving policymakers additional flexibility and supporting a pro-growth stance.

For investors, the message is clear:
India’s ultra-low inflation landscape is supportive for equities, credit markets, and long-term investment positioning.