Retail inflation in India cooled sharply to 0.25% in October, marking a new series low and surprising both analysts and market participants. While this dip appears encouraging at first glance, it is essential to understand why inflation has fallen and what it truly means for investors. Economic numbers can often be misleading if viewed in isolation, and this one is no exception. The sharp cooling is driven largely by the base effect, which makes the current inflation print look softer compared to the unusually high price levels seen during the same period last year.

According to a report by The Economic Times, food prices — which account for nearly half of the CPI basket — fell by over 5% YoY, and GST cuts helped pull down the prices of several essential goods.

• Does this retail inflation mean the market will rally?
• Will the RBI cut interest rates?
• Should I change my investment strategy now?

Let's break it all down in a clear, simple, investor-friendly way that helps you understand what this inflation number really means and how it may affect your next move in the market.