#"Economy"
#"Markets"
#"Monetary Policy"
📰 What’s Going On
India’s Consumer Price Index (CPI) inflation dropped to 0.25% year-on-year in October 2025, according to the latest data.
Food inflation, a major component of CPI, has plummeted to –5.02%, while recent GST rate cuts have further muted consumer price pressures.
On the wholesale side, the Wholesale Price Index (WPI) also posted a sharp drop — running at a 27-month low, mainly due to deflation in food commodities.
💡 Why This Matters for Markets & Policy
- Monetary Policy Levers: Such low inflation gives the RBI room to ease rates or maintain a dovish stance.
- Bond Yields: Lower inflation could put downward pressure on yields, making government bonds more attractive.
- Consumer Spending: While cheaper food is good for consumers, persistent deflation could hurt rural income and cap spending over time.
- Equity Markets: Sectors like consumer discretionary may benefit from higher purchasing power. On the flip side, financials and lenders may see pressure if interest rates stay low longer.
🧠Vanshi Wealth Viewpoint
At Vanshi Wealth Pvt. Ltd., we see this development as a key macro inflection point:
- It’s a potential catalyst for rate cuts — or at least a sustained dovish bias — by the RBI.
- For investors, it suggests a favorable backdrop for fixed income (especially high-quality bonds) + long-term equity exposure in consumer and rural themes.
- However, we also remain cautious about demand-side risks, especially if deflation hurts farmer incomes or saving behaviour.
Our Recommendations:
1. Consider diversifying into debt funds or bonds, especially with longer duration.
2. Maintain or increase exposure to consumer-focused equity funds.
3. Monitor RBI policy commentary and inflation trends closely — this could drive your next rebalancing move.
📚 Sources
- Hindustan Times – *India’s retail inflation rate falls to a record low of 0.25% in October 2025
- Business Standard – *Consumer price inflation slides to 0.25%, food prices tumble 5%
- LiveMint – *Wholesale inflation falls to 27-month low in October as food prices slump
- BusinessToday – *India’s inflation hits record low of 0.25% in October, driven by falling food prices
India’s Consumer Price Index (CPI) inflation dropped to 0.25% year-on-year in October 2025, according to the latest data.
Food inflation, a major component of CPI, has plummeted to –5.02%, while recent GST rate cuts have further muted consumer price pressures.
On the wholesale side, the Wholesale Price Index (WPI) also posted a sharp drop — running at a 27-month low, mainly due to deflation in food commodities.
💡 Why This Matters for Markets & Policy
- Monetary Policy Levers: Such low inflation gives the RBI room to ease rates or maintain a dovish stance.
- Bond Yields: Lower inflation could put downward pressure on yields, making government bonds more attractive.
- Consumer Spending: While cheaper food is good for consumers, persistent deflation could hurt rural income and cap spending over time.
- Equity Markets: Sectors like consumer discretionary may benefit from higher purchasing power. On the flip side, financials and lenders may see pressure if interest rates stay low longer.
🧠Vanshi Wealth Viewpoint
At Vanshi Wealth Pvt. Ltd., we see this development as a key macro inflection point:
- It’s a potential catalyst for rate cuts — or at least a sustained dovish bias — by the RBI.
- For investors, it suggests a favorable backdrop for fixed income (especially high-quality bonds) + long-term equity exposure in consumer and rural themes.
- However, we also remain cautious about demand-side risks, especially if deflation hurts farmer incomes or saving behaviour.
Our Recommendations:
1. Consider diversifying into debt funds or bonds, especially with longer duration.
2. Maintain or increase exposure to consumer-focused equity funds.
3. Monitor RBI policy commentary and inflation trends closely — this could drive your next rebalancing move.
📚 Sources
- Hindustan Times – *India’s retail inflation rate falls to a record low of 0.25% in October 2025
- Business Standard – *Consumer price inflation slides to 0.25%, food prices tumble 5%
- LiveMint – *Wholesale inflation falls to 27-month low in October as food prices slump
- BusinessToday – *India’s inflation hits record low of 0.25% in October, driven by falling food prices