14 Nov 2025 — 3:45 IST – India’s retail inflation dropping to 0.25% in October looks like the perfect headline. Record low. Food is getting cheaper. GST cuts are kicking in. Rate-cut hopes rising for December.
However, unlike the mainstream media’s celebration of the fall, the deeper data tells a different story — one that comes with hidden risks for farmers, households, and even the RBI’s next policy move.
Let’s break it down in simple words –
1. Why inflation REALLY fell — and why it may not last
Most headlines say “prices cooled”. But if we look closely, almost 70% of the fall came from temporary factors:
| Factor | Impact on Inflation | Real Meaning |
|---|---|---|
| GST cuts (Sept 22) | –0.12 percentage points | A tax cut lowered prices, not a real demand slowdown |
| Food deflation –5.02% | Biggest driver | Mostly a vegetable price crash, not structural change |
| Base effect | ~–2.5% in food YoY | Inflation looks low only because last year was high |
| Export slowdown | Oversupply locally | Pushed prices down temporarily |
So the 0.25% figure is not a “strong economy”. It’s mostly mathematics + tax + temporary price drops.
2. Farmers are the silent losers
Unlike urban consumers celebrating cheaper vegetables, the record fall exposes a harsh side:
- Vegetables –27.57% YoY
- Pulses –16.2% YoY
- Tomatoes, onions, and leafy greens all fell sharply
- Oversupply + weak mandi prices = rural income stress
Cheaper food is good for cities, but for farmers, this means lower income and shrinking profit margins.
A healthy economy needs both consumers AND producers doing well — right now, only one side is smiling.
3. Core inflation tells a different story
Headline inflation = looks low
but Core inflation (non-food, non-fuel) = still 4.4%
Why?
- Gold prices jumped 5% in October
- Miscellaneous services became costlier
- Personal care and housing services stayed sticky
Unlike food inflation, core inflation does not fall easily.
This is what the RBI actually watches while taking monetary decisions.
4. RBI may NOT blindly trust this number
Everyone is saying: “Rate cut in December confirmed!”
But the RBI will look deeper:
- The fall is not demand-driven
- Food inflation is too volatile
- Global oil prices are stabilising
- Domestic growth may slow
- Transmission of earlier rate cuts is still incomplete
RBI has always preferred sustainable inflation, not a one-month dip.
5. Why inflation may bounce back by January
Here’s the part no major media outlet is highlighting:
- Winter vegetables become more expensive
- The GST cut effect will fade
- Wedding season = higher gold demand
- Export orders may return after tariff adjustments
- Crude oil consumption rises after December
This could push inflation back to 3.5–4% within 8–10 weeks.
Bottom Line
Yes, a 0.25% drop in inflation looks amazing.
But once you peel the layers, the picture changes.
It’s a soft month, not a soft economy.
Prices dropped for temporary reasons.
Farmers are hurting.
Core inflation is still high.
RBI may stay cautious in December.
And inflation could bounce back early next year.
Unlike flashy headlines, the real story is this: India’s record-low inflation is more fragile than it looks — and the risks beneath are growing quietly.
