Record-low CPI hides ‘invisible inflation’, urban Indians now paying Hong Kong, Dubai–level costs, say experts

India’s headline inflation may be at one of its lowest points in history, but for urban Indians—especially those living in major metros like Gurgaon and Mumbai—the lived reality feels drastically different. Chartered Accountant and investment banker Sarthak Ahuja sparked a heated debate after posting a detailed analysis on LinkedIn, arguing that India’s official CPI numbers mask the true cost pressures faced by middle-class households.

Ahuja opened his post with an eye-catching anecdote: friends visiting from San Francisco, Hong Kong, Dubai and Switzerland now say that the cost of living in Gurgaon is nearly identical to their global cities. “Whenever they visit India,” he wrote, “they end up spending the same amount on eating out, ordering in, salons and other such places.” Initially skeptical, Ahuja dug into the data—and says the findings explain the paradox.

Retail inflation dropped to an unprecedented 0.25% in October, according to government figures released on Wednesday, helped largely by a steep fall in food costs and recent tax cuts on everyday essentials. The reading came in far below market forecasts and is the weakest inflation print recorded since the current CPI framework—based on 2012 prices—was introduced in 2015.

Food inflation contracted for the fifth month in a row, sliding 5% compared to a year earlier. The easing was visible across several other segments as well: personal care products saw a 1.9% decline from September, transport and communication fell 0.6%, while clothing, footwear and recreation categories each dipped 0.2%. Healthcare expenses edged down by 0.1%.

The sharp moderation follows the government’s late-September decision to reduce GST on a wide range of mass-consumption goods, including dairy items and personal care products. The tax relief was aimed at shoring up domestic demand at a time when global trade worries have intensified after the U.S. imposed 50% punitive tariffs on multiple imports.

According to Ahuja, India’s CPI inflation for October 2025 stands at just 0.25%, possibly the lowest ever. But this number, he argues, is heavily influenced by the structure of India’s population. Nearly 79 crore people—more than 55% of the country—receive subsidised food grains at Rs 2–3 per kg, well below government cost. Moreover, 56% of students are enrolled in free government schools, and 86% of Indians live in homes they own, shielding them from rent-led inflation. Such realities pull down the national inflation average.

“This is not the experience of a middle-class urban Indian,” Ahuja noted. For those living in metros, buying groceries on quick-commerce apps, and sending children to private schools, the inflation they feel is far higher.

Ahuja pointed out three sharp inflation drivers in the last year alone:

Private school fees have risen 10–20% in a year, and 169% over the past decade.

Quick-commerce grocery prices are higher by 20%, reflecting delivery, warehousing and convenience costs.

Premiumization across sectors—from restaurants to housing to lifestyle brands—has shifted products and experiences toward wealthier consumers, pushing average prices up.

Added to this is healthcare inflation, which he estimates is “easily above 10%” at private hospitals. Together, he says, the real inflation experienced by metro-city residents is 10–15%, far removed from official figures.

This divergence is jarring to NRIs, who are “shocked” by Indian menu prices and service costs that now rival major world cities. Yet, Ahuja notes, the irony is stark: “If you live in Gurgaon or Mumbai today, you live in a city with international costs, and deplorable infrastructure and air to breathe.”

His most controversial claim? That even at a ₹70 lakh annual salary, many urban Indians still feel—and live—“middle class” once housing, schooling, healthcare, and lifestyle costs are accounted for.

Ahuja’s post has resonated widely, capturing a growing sentiment: while India’s macro numbers look stable, the daily reality for city dwellers is anything but.