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India's retail inflation rose to 1.33% in December, below expectations of 1.56%
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Food inflation stayed negative for the seventh consecutive month in December 2025
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Core inflation excluding food and fuel rose to 4.6%, highest in over two years
India's retail inflation edged up marginally to a three-month high in December, lower than expectations. Food Inflation remained negative for the seventh consecutive month.
The Consumer Price Based-inflation was 1.33% last month, according to data released by the Ministry of Statistics on Monday. Analysts tracked by Bloomberg had estimated the inflation at 1.56%.
In comparison, the CPI was 0.71% in November and 0.25% in October — the lowest-ever recorded by the government.
Retail inflation has remained well below the Reserve Bank of India's 4% target and +/-2% tolerance band for a fourth straight month and a second consecutive quarter. The central bank has slashed its inflation forecast in the current fiscal to 2% from 2.6% earlier.
The increase in headline inflation and food inflation during the month of December, 2025 is mainly attributed to increase in inflation of personal care and effects, vegetables, meat and fish, egg, spices and pulses and products, the Ministry said.
Core inflation, which excludes the volatile food and fuel prices, rose by 20 basis points month-on-month to 4.6%, the highest in over two year.
Inflation Internals
Food basket
Cereals and products prices fell 0.35% vs rise of 0.1% in November
Meat and fish prices up 5.12 vs 2.50%
Egg prices up 4.76% vs 3.77%
Vegetable prices down 18.47% vs decline of 22.2%
Oils and fats prices up 6.75% vs 7.87%
Pulses and products prices down 15.09% vs decline of 15.86%
Milk and products prices up 2.56% vs 2.45%
Spices prices down 2.15% vs decline of 2.89%
Sugar and Confectionery prices up 4.66% vs 4.02%
Housing prices went up by 2.86% (vs 2.95% in November), clothing and footwear prices by 1.44% (vs 1.5%) and fuel and lighting prices by 1.97% (vs 2.32%).
Inflation Expected To Edge Up
Inflation is expected to edge up in coming months as base effects fade and food prices normalise, with headline inflation projected to plateau around September 26, analysts at Dolar Capital said.
December also marks the final release under the current CPI series, with the new 2024 base series set to be rolled out next month.
"While recent headline inflation has been held down by subdued food prices, the expected reduction in the food and beverages weight from 45% to around 39–42% under the new series is likely to partly offset this disinflationary drag, resulting in inflation readings that could be around 20–50 bps higher in the near term," analysts said.
"Over medium to long term, inflation trajectory is expected to remain broadly consistent with the current series, albeit with slightly lower volatility from supply shocks. However, this change is unlikely to be large enough to generate additional policy space for the MPC," the note.
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