India’s retail inflation, measured by the Consumer Price Index, rose to 1.33% in December 2025, up from 0.71% in November, marking a three-month high. The increase was mainly driven by slower drops in food prices and higher costs for items like vegetables, meat, eggs, pulses, spices, and personal care products.
Despite the rise, inflation remains well below the Reserve Bank of India’s 4% target range, staying under the lower comfort limit of 2% for the eleventh month in a row. Food inflation, though still negative, eased compared with November, pushing overall prices higher.
Urban areas saw faster price increases than rural areas. Some sectors, including housing, education, and health, showed mixed trends, with housing inflation slightly easing.
Economists note that even with the December uptick, inflation is low by historical standards. Core inflation, which excludes food and fuel, also remains modest, showing limited pressure from consumer demand.
The low inflation gives the RBI flexibility to continue an accommodative monetary policy. In 2025, the central bank cut interest rates, and with inflation below the comfort level, policymakers have room to support economic growth. The RBI will also monitor data carefully ahead of the revised CPI series using 2024 as the base year.
Also Read: Rupee slips 5 paise to 90.22
