India, Oct 08 : India’s food inflation continued its downward trajectory in September, with the Bank of Baroda Essential Commodities Index (BoB ECI) recording deflation for the fifth consecutive month. The index slipped by 1% year on year and further accelerated to 3.8% in the first week of October 2025, reflecting sustained moderation in food prices.
The decline was primarily driven by sharp corrections in tomato, onion, and potato prices, which had earlier spiked inflation. “Tomato prices witnessed a steep correction in September, supported by robust arrivals and efficient supply management,” said Dipanwita Mazumdar, Economist at Bank of Baroda.
According to the report, India’s headline Consumer Price Index (CPI) is projected to ease to around 1.2% in September 2025, supported by a favourable base effect and the pass through of GST rate cuts by auto, FMCG, and e-commerce sectors.
Out of the 20 commodities tracked by BoB ECI, nine registered deflation. Onion prices saw their sharpest decline since December 2020, plunging over 46% year on year, while potato prices fell nearly 31%. Tomato prices, which had briefly rebounded in August, dropped 8.3% YoY in September.
The aggregate CPI weighted trajectory for TOP vegetables (tomato, onion, potato) fell 29.5% during the month, indicating improved supply and logistics. Data from major producing states such as Maharashtra, Madhya Pradesh, and Uttar Pradesh showed strong arrival volumes compared to the previous year.
Other food categories also contributed to the easing trend. Edible oils including mustard, soya, and sunflower saw price declines amid abundant global supply, particularly from Argentina. Pulses, especially gram and tur dal, also softened, with arhar prices down nearly 30% YoY.
Sequentially, the BoB ECI slipped 0.3% month on month, suggesting a steady cooling of inflation momentum.
While energy and metal prices firmed slightly due to global tariff effects, the report noted that their pass-through to consumer inflation remained limited. Core inflation, excluding gold, is estimated in the 3.1–3.5% range, though volatility could persist amid rising global gold prices.
Looking ahead, the Bank of Baroda report said food prices are expected to stay benign through Q3 FY26, supported by strong harvest arrivals. “The downward trend in tomato, onion, and potato (TOP) prices could continue in the near term, posing a significant downside risk to inflation,” Mazumdar added.