Inflation Was 0.25%. Ask the Sabziwala What That Means.

October’s inflation was the lowest India has ever recorded. The vegetable seller near my school says his customers still complain about prices. Both are telling the truth.

A record low

Retail inflation in October came in at 0.25%, the lowest since the current series began. Vegetable prices fell sharply compared with a year earlier, the GST cuts started to lower prices of packaged goods, and last October’s high prices made this year’s comparison look especially soft. Economists call that last factor a base effect, and it did a lot of the work.

I asked the vegetable seller outside my school whether prices had fallen. He laughed and said tomatoes were cheaper than last year, yes, but his customers were still bargaining harder than ever. He was not contradicting the data. He was describing something the data does not measure.

Why it does not feel like zero

Inflation measures the change in prices, not the level. A 0.25% figure means prices on average are roughly where they were a year ago. It does not mean they went back to where they were before the big increases of 2022 and 2023. If tomatoes doubled two years ago and fell 20% this year, they are still far more expensive than people remember. Our memories anchor to older prices, not last year’s.

The average also hides very different experiences. My family’s biggest increases this year were school fees and the doctor, both of which rose much faster than vegetables fell. Families that spend a larger share on food felt real relief. Families that spend more on services saw little change. The index is a weighted average of everyone, which means it describes almost no one exactly.

Why the RBI still cares

Very low inflation is not automatically good news. If prices are rising too slowly, it can mean demand is weak and businesses are cutting prices to sell. It also gives the RBI room to cut interest rates, which it had already done three times this year. That makes loans cheaper and, in theory, helps people spend and businesses invest.

The vegetable seller and the statistics office are both right because they are answering different questions. The statistics office asks how much prices changed this year. The customer asks whether things feel affordable, which depends on years of change and on what they personally buy. When a headline number does not match how life feels, it is usually worth asking which question each side is answering.