Capital Market has conducted a poll amongst economists across leading banks, rating agencies, financial advisories and brokerages for September 2025 CPI inflation projections. The results of the poll as indicated by the median of CPI inflation forecasts from economists, shows that CPI inflation would decline to 1.6% in September 2025 from 2.1% reading in August 2025.

The economists in the poll have projected the CPI inflation in the range of 1.5% to 1.8% for September 2025. The median of various CPI inflation forecast received from economists stood at 1.6%, while the was also at 1.6% for September 2025.

CPI Inflation: August 2025

The all-India general CPI inflation increased to 2.07% in August 2025 (new base 2012=100), compared with 1.61% in July 2025. The corresponding provisional inflation rate for rural area was 1.69% and urban area 2.47% in August 2025 as against 1.18% and 2.10% in July 2025. The core CPI inflation declined to 4.21% in August 2025 compared with 4.22% in July 2025. The cumulative CPI inflation has eased to 2.35% in April-August FY2026 compared with 4.38% in April-August FY2025.

Among the CPI components, inflation of food and beverages increased to 0.05% in August 2025 from (-) 0.84% in July 2025. Within the food items, the inflation for vegetables increased to (-) 15.92%, meat and fish 1.48%, oils and fats 21.24%, sugar and confectionery 3.73% and egg 3.12%. However, the inflation for fruits eased to 11.65%, cereals and products 2.70%, pulses and products (-) 14.53%, prepared meals, snacks, sweets etc. 4.19%. Further, the inflation for spices declined to (-) 3.24%, milk and products 2.63% and non-alcoholic beverages 4.30% in August 2025.

The inflation for housing declined to 3.09%, while that for miscellaneous items rose to 5.05% in August 2025. Within the miscellaneous items, the inflation for personal care and effects increased to 16.61%, while the inflation for education declined to 3.60%, transport and communication 1.94%, health 4.40%, recreation and amusement 2.20% and household goods and services 2.54% in August 2025.

The inflation for clothing and footwear declined to 2.33%, while the CPI inflation of fuel and light eased to 2.43% in August 2025.

FAO Food Price Index: September 2025

The benchmark of world food commodity prices declined slightly in September, led by drops in the sugar and dairy price indices, according to the Food and Agriculture Organization of the United Nations (FAO) Friday. The FAO Food Price Index declined to 128.8 points in September 129.7 points in August. The September reading represents a 3.4% increase from a year ago.

The FAO Cereal Price Index declined by 0.6% from August. International wheat prices decreased for the third consecutive month amid subdued international demand and confirmation of large harvests in key producing countries. World maize prices also dropped, amid forecasts of abundant supplies as well as the temporary suspension of grain export taxes in Argentina. The FAO All Rice Price Index fell by 0.5% as reduced purchase orders by buyers in the Philippines and Africa weighed on the market.

The FAO Vegetable Oil Price Index decreased by 0.7% in September, as lower palm and soybean oil quotations – partly reflecting robust stocks of the former in Malaysia and elevated exportable supplies of the latter from Argentina - more than offset increases in sunflower and rapeseed oil prices.

The FAO Meat Price Index, by contrast, increased by 0.7% from its revised August level and reached a new record high, up 6.6% from a year earlier. The rise reflected higher world bovine and ovine meat prices, while pig and poultry meat quotations remained broadly stable. Bovine meat prices climbed to an all-time high, supported by strong demand in the United States of America, where limited domestic supplies and favourable price differential continued to encourage imports.

The FAO Dairy Price Index declined by 2.6% in September. World butter quotations fell by 7.0%, partly reflecting waning demand for ice cream in the Northern Hemisphere and higher production prospects in Oceania. Milk powder quotations decreased mainly on softer demand from key importers and firmer export competition. Cheese prices declined only marginally.

The FAO Sugar Price Index declined by 4.1% from August to reach its lowest level since March 2021. The drop was driven by higher-than-expected sugar production in Brazil and favourable harvest prospects in India and Thailand, following ample monsoon rains and expanded plantings.

Outlook

The benign inflation conditions during 2025-26 so far have been primarily driven by a sharp decline in food inflation from its peak of October 2024. Inflation within the fuel group moved in a narrow range of 2.4-2.7% during June-August. Core inflation remained largely contained at 4.2% in August. Excluding precious metals, core inflation was at 3.0% in August. The healthy south-west monsoon, higher kharif sowing, adequate reservoir levels and comfortable buffer stock of foodgrains is expected keep food prices benign. The recently implemented GST rate rationalisation would lead to a reduction in prices of several items in the CPI basket. The RBI expects inflation outcome to be softer than what was projected in the August MPC resolution, primarily on account of the GST rate cuts and benign food prices. Despite the anticipation of moderate momentum during H2, large unfavourable base effects are likely to exert upward pressure on headline CPI inflation, especially in Q4. The RBI projects CPI inflation for 2025-26 is projected at 2.6% with Q2 at 1.8%, Q3 at 1.8%, and Q4 at 4.0%. CPI inflation for Q1 of 2026-27 is projected at 4.5%.