The year-on-year (YoY) CPI inflation eased to a 99-month low of 1.5% in September 2025 (ICRA’s exp: +1.8%), pulled down by a sharper-than-anticipated deflation in food and beverages (F&B) to 1.4%, even as several other categories recorded a sequential uptick in their YoY inflation prints. While the early onset of Monsoon and excess rainfall aided kharif sowing, the impact of flooding in some parts of the country in late August 2025 and early-September 2025, as well as the India Meteorological Department’s (IMD) forecast of above-normal rains in October on the kharif crop harvest and yields remains a key monitorable. Given the impact of the GST rationalisation and an elevated base (+6.2% in October 2024), the headline CPI inflation is likely to soften further in October 2025. ICRA believes that a final 25 bps rate cut is possible in December 2025, with its timing contingent on the degree of further transmission of the cumulative 100 bps rate cuts to the credit market as well as growth implications of GST rejig and tariffs.