“The Indian economy showed signs of a further pick up in momentum, despite lingering external sector headwinds. Demand conditions exhibited signs of improvement with the revival of urban demand and continued strength in rural demand,” the central bank noted.
Digital payments, which have been a key marker of consumption patterns and formalisation of the economy, showed a moderation in both value and volume during October 2025. However, RBI highlighted that recent data still pointed to rising digital payment usage across regions and merchant categories, including groceries, supermarkets and even gold purchases – traditionally viewed as cash-heavy transactions.
Not all indicators moved in the same direction. Electricity demand weakened, with the central bank attributing the dip to unseasonal rains and an early onset of winter, reducing cooling requirements. Fuel consumption offered a mixed trend as well: petrol demand rose with higher mobility and festive travel, while diesel usage recorded a slight decline.
Overall demand conditions improved during the month, buoyed significantly by rural consumption. RBI noted that rural demand “steered overall demand,” benefiting from healthy monsoon progress, strong farm sector activity and the relief impact of GST rate revisions, which helped sustain spending power outside urban centres.
Inflation cools sharply to record low
India’s inflation trajectory also strengthened the macroeconomic outlook, with headline retail inflation dropping to its lowest level in the current CPI series (2012 base year). Headline CPI moderated sharply to 0.3 per cent in October 2025, compared with 1.4 per cent in September, helped by deeper deflation in food prices, the impact of GST rate cuts on goods and services, and a favourable base effect.The RBI noted that the food basket provided the largest drag on inflation, as prices of vegetables, pulses and spices declined further. Inflation cooled across a wide mix of sub-categories including cereals, meat and fish, milk and milk products, eggs, oils and fats, fruits, prepared meals and non-alcoholic beverages, strengthening the downward trend in food inflation.Fuel and light inflation held steady at 2.0 per cent in October, unchanged from September. LPG inflation remained elevated, the central bank observed, while electricity-related inflation continued to stay low and stable.
Core inflation—excluding food and fuel—also moderated, easing to 4.3 per cent in October from 4.4 per cent a month earlier. This softening was led by categories such as clothing and footwear, health, recreation and amusement, and transport and communication. However, inflation edged higher in segments including education, pan, tobacco and intoxicants, and personal care and effects.
RBI added that excluding precious metals, the core CPI basket actually recorded a small 0.1 per cent month-on-month decline, reflecting the influence of the recent GST rate reductions on pricing trends in several goods and services.