Page 19 - Policy Economic Report - October 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

? The decline in headline inflation and food inflation during the month of September, 2025 is
mainly attributed to favorable base effect and to decline in inflation of Vegetables, Oil and fats,
Fruits, Pulses and products, Cereal and products, Egg, Fuel and light etc.

? Rural Inflation: A decrease in headline and food inflation in rural sector observed in September,
2025. The headline inflation is 1.07% (Provisional) in September, 2025 while it was 1.69% in
August, 2025. The CFPI based food inflation in rural sector is observed as -2.17% (Provisional) in
September, 2025 in comparison to -0.70% in August, 2025.

? Urban Inflation: A decrease from 2.47% in August, 2025 to 2.04% (Provisional) in September,
2025 is observed in headline inflation of urban sector. Decrease is also observed in food inflation
from -0.53% in August, 2025 to -2.47% (Provisional) in September, 2025.

? Housing Inflation: Year-on-year Housing inflation rate for the month of September, 2025 is
3.98% (Provisional). Corresponding inflation rate for the month of August, 2025 was 3.09%. The
housing index is compiled for urban sector only.

? Education Inflation: Year-on-year Education inflation rate for the month of September, 2025 is
3.44% (Provisional). Corresponding inflation rate for the month of August, 2025 was 3.60%. It is
combined education inflation for both rural and urban sector.

? Health Inflation: Year-on-year Health inflation rate for the month of September, 2025 is 4.34%
(Provisional). Corresponding inflation rate for the month of August, 2025 was 4.40%. It is
combined health inflation for both rural and urban sector.

? Transport & Communication: Year-on-year Transport & communication inflation rate for the
month of September, 2025 is 1.82% (Provisional). Corresponding inflation rate for the month
of August, 2025 was 1.94%. It is combined inflation rate for both rural and urban sector.

? Fuel & light: Year-on-year Fuel & light inflation rate for the month of September, 2025 is
1.98% (Provisional). Corresponding inflation rate for the month of August, 2025 was 2.32%. It is
combined inflation rate for both rural and urban sector.

Further, RBI has lowered its CPI inflation forecast for FY 2025–26 to 2.6%, down from 3.1%.

? While the inflation was earlier projected at 3.8% (Q4 FY 2024-25) and 3.6% (Q1 FY 2025-26),
the actual outcomes were lower by 90 bps. The fall was driven by a steep, prolonged 9-month
food price decline of 10.5%, the longest in the CPI series.

? Milder summer temperatures further eased seasonal price pressures, keeping realised inflation
below expectations in Q1 and Q2 FY 2025-26.

? GST rate rationalisation from September 22, 2025, has simplified taxes and lowered consumer
prices, directly impacting around 11.4% of the CPI basket across product groups.

October 2025 Page | 18