Relevance: GS Paper III – Indian Economy (Inflation, Price Stability)
Source: The Hindu, Ministry of Statistics & Programme Implementation (MOSPI)

Context & News

Retail inflation, measured by the Consumer Price Index (CPI), fell to a historic low of 0.25% in October 2025—the lowest since the CPI series began in 2012.
The government attributes the decline to GST rate cuts, a favourable base effect, and a sharp fall in prices of key food items such as vegetables and fruits.

The Consumer Price Index (CPI) is released by the Ministry of Statistics and Programme Implementation (MoSPI), specifically through its National Statistical Office (NSO). Other related CPI series are released by the Labour Bureau under the Ministry of Labour and Employment. 

Concept: What Is Retail Inflation?

Retail inflation reflects the rise in prices faced by consumers, captured through the CPI.
It measures price changes across categories such as:

• Food & beverages
• Housing
• Fuel & light
• Clothing & footwear
• Miscellaneous services

The base effect plays a crucial role—if prices were high in the same month last year, inflation may appear lower even if current prices haven’t dropped significantly.

Key Data

Significance for the Economy

• Lower inflation eases household budgets and boosts consumer confidence.
• Gives the RBI more room for monetary policy adjustments.
• Indicates improving price stability, aligning with SDG 8 (Economic Growth).

UPSC Prelims Practice Question

With reference to inflation in India, consider the following statements:

1. Retail inflation in India is measured using the Consumer Price Index.
2. A favourable base effect can contribute to lower measured inflation.
3. Fuel and light have no weight in the Consumer Price Index.

Which of the above statements are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) All of the above

Answer: (a) 1 and 2 only

One-line Wrap:
India’s record-low retail inflation of 0.25% highlights the combined effect of policy support, easing food prices, and statistical base effects on overall price stability.