October’s retail inflation was the lowest India has ever recorded. That does not mean prices fell. It means they rose very slowly, and the difference is the whole lesson.
In Class 6, the canteen samosa cost ₹12. Today it costs ₹15. So when the news said India’s retail inflation had fallen to 0.25% in October, the lowest since the current series began, a lot of students reasonably asked why nothing at recess felt cheaper. The answer is that low inflation does not mean low prices. It means prices rose very little compared with a year ago. The samosa did not get cheaper; it simply stopped getting more expensive quite so quickly.
A canteen menu is a price index
To measure inflation for 140 crore people, statisticians do what you would do with a canteen menu. Write down every item, track every price each month, and average the changes, weighted by how much people actually buy. If samosas outsell fruit cups ten to one, samosa prices matter ten times more. The national version of that menu is the Consumer Price Index, and its basket covers food, rent, fuel, clothing and school fees.
Why October came in so low
Three things lined up. Vegetable prices fell sharply after a good monsoon, and food is the heaviest item in the basket. Last October’s inflation had been unusually high, so comparing against it flattered this year’s number, which economists call a base effect. And the GST rate cuts that took effect on September 22 lowered the price of everything from soap to small cars. None of those is permanent, which is why the RBI expects inflation to drift back toward 4% next year.
Why the target is not zero
Zero inflation sounds ideal and is not. If prices never rose, or fell over time, the rational move would be to postpone every purchase, because the same money would buy more later. Everyone postponing at once means shops sell less, businesses cut jobs and the economy stalls. A small, steady rate keeps a gentle reason to buy today rather than next year. That is why the RBI targets roughly 4% and steers toward it with the repo rate, rather than trying to freeze prices.
The quiet pay cut
Inflation works as a pay cut for anyone whose income rises more slowly than prices. If prices climb 5% and pocket money climbs not at all, purchasing power has fallen 5% without anyone taking anything. A year of 0.25% inflation is a rare year in which savings in a bank account comfortably beat prices. It is worth noticing, because years like this one do not come often.
Sources: MoSPI CPI release for October 2025; RBI Monetary Policy Statement, October 2025.
- Inflation measures how fast prices rise, not whether they are high. 0.25% means prices barely rose over the year.
- October’s record low came from falling vegetable prices, a high base from last year and the September GST cuts.
- India aims for about 4% inflation rather than zero, because mild inflation keeps an economy moving.
- Inflation compounds. At 5% a year, prices double roughly every 14 years.
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