New Delhi: India’s retail inflation is expected to fall further in October, supported by a high base effect, easing food prices, and the full impact of recent GST reforms, a new report has said. The data compiled by Union Bank of India suggests that inflationary pressures will only rise gradually in the coming months.

The bank said its projection for October’s Consumer Price Index (CPI) inflation is currently tracking below 0.50 per cent. It also expects food inflation to drop sharply and remain in the negative zone during the winter months, as the impact of recent floods has been limited.

Inflation has already eased to an eight-year low, helped by lower food prices and the rationalisation of GST rates. The report lowered its inflation forecast for FY26 to 2.6 per cent from the earlier estimate of 3.1 per cent.

It added that inflation is likely to stay below the RBI’s target range for most of the year and may rise slightly in the fourth quarter due to base effects. In September, CPI — which measures the average change in retail prices of goods and services –showed a notable decline compared to the previous month, highlighting a broad moderation in price growth.

The Consumer Food Price Index (CFPI) stood at -2.28 per cent, indicating that food prices have been falling since June 2025. Data also showed that inflation in rural areas was 1.07 per cent, while urban inflation was slightly higher at 2.04 per cent.

Food inflation remained negative in both segments, at -2.17 per cent in rural areas and -2.47 per cent in urban regions, reflecting the impact of falling prices of vegetables and edible oils. The government attributed this decline to “favourable base effects” and lower prices of key food items such as vegetables, oils, fruits, cereals, pulses, eggs, and fuel.

Economists believe that if the current trend continues, India could maintain a low-inflation environment through the festive and winter seasons, supporting consumer demand and overall economic stability.

Inflation is expected to increase to its highest level for 21 months as more pressure piles on the Chancellor and the Bank of England.

Economists have predicted that Consumer Prices Index (CPI) inflation will have hit 4% in September, when the Office for National Statistics (ONS) reveals its latest data on Wednesday.

It would mark the highest level since January 2024.

Inflation struck 3.8% in July and August amid pressure from rising food prices, as firms highlighted increased tax and labour costs.

Economists at Pantheon Macroeconomics predicted that higher motor fuel and air fare prices would help drive inflation to 4% in September.

It also pointed towards “strong clothes prices” for the month, but indicated this could be offset by “slightly softer” services price inflation.

Economists have also suggested there could be a contribution from increased private school fees.

Some schools were expected to increase fees from the start of the new school year as they staggered higher costs for parents after the Government introduced a 20% VAT rate for private school fees at the start of the year.

September’s predicted jump in inflation could represent a peak in the rising cost of living for UK households.

The Bank of England previously forecast that inflation would peak at around 4% in September before steadily falling.

Pantheon Macroeconomics’ Rob Wood has said he expects inflation to “slow only slightly” in the following months, dipping to 3.8% by the end of the year.

Other economists have been more optimistic, with Investec suggesting it expects the rate to have peaked at 3.9% in September before falling.

Any increase would still highlight a challenging economic backdrop for the Bank of England as it seeks to bring inflation down to its 2% target rate.

On Friday, the Bank’s top economist Huw Pill urged other rate-setters to be “more cautious” about future cuts due to concerns that inflation could stay stubbornly high.

Another rise in inflation could also be a major concern for Chancellor Rachel Reeves, a month ahead of her autumn Budget.

The September inflation rate is typically used to decide the level of increase for many benefits, such as universal credit, tax credits and disability benefits.

This rate is also a key part of the Pension Triple Lock, which is used to decide how much pensions will increase by in the following April.

However, the increase is based on either this inflation rate, average earnings growth between May and July, or 2.5%.

Given earnings growth was confirmed as 4.8%, the inflation rate will only be used if there is a shock acceleration beyond this level.

A rise in inflation in September could result in higher-than-expected spending when the Chancellor is already looking to fill a black hole in the state finances.

However, higher inflation would also contribute to a higher tax take, with the September rate also typically used to calculate some annual tax increases such as for business rates.

Finance Minister Senator Muhammad Aurangzeb met with Turkey’s Minister of Treasury and Finance, Mehmet Şimşek, in Washington, DC, where both sides acknowledged the ongoing high-level engagements between the leadership of Pakistan and Turkey.

During his visit to the United States, the two ministers reaffirmed their shared commitment to further strengthening the longstanding brotherly relations between the two countries.

Finance Minister Aurangzeb briefed his Turkish counterpart on Pakistan’s ongoing economic reforms, highlighting initiatives in areas such as tax policy, energy, state-owned enterprises, privatization, and public finance.

He also shared details about the Federal Board of Revenue’s (FBR) reform journey, which was recently presented at a World Bank event, and Pakistan’s efforts to improve its tax-to-GDP ratio.

Aurangzeb discussed the country’s progress in integrating data across government departments to enhance financial management, transparency, and accountability.

Separately, the Finance Minister held a meeting with International Finance Corporation (IFC) Managing Director Makhtar Diop.

He expressed gratitude to the IFC for designating Pakistan as a regional hub under its recent organizational restructuring, describing the recognition as a reflection of growing global confidence in Pakistan’s economy.

Aurangzeb also briefed Makhtar Diop on developments in the Reko Diq mining project and expressed hope that the EXIM Bank would soon join the venture.

He appreciated IFC’s support in financial inclusion and digital payment rights projects at the grassroots level.

Furthermore, he acknowledged IFC’s advisory contributions in the sectors of pharmaceuticals, electric vehicles, and commodity exchanges.

The minister welcomed the IFC Managing Director’s plan to visit Pakistan during the upcoming Spring Meetings.

On this occasion, both Aurangzeb and Makhtar Diop also participated in a signing ceremony for a swap agreement between the State Bank of Pakistan and the IFC.