Indian Inflation Rate Rises Less than Expected

The consumer price inflation rate in India rose to 1.33% in December of 2025 from 0.71% in the earlier month, extending the normalization from the record low of 0.25% in October but below the market consensus of 1.5%. Despite the second consecutive increase, the inflation rate remained sharply below the Reserve Bank of India's tolerance limit of 2%-6%. Prices fell less for food (-2.71% vs -3.91% in November), which represent nearly half of the Indian consumer basket. In turn, inflation eased for housing (2.86% vs 2.95%) and fuel and light (1.97% vs 2.32%). From the previous month, the Indian CPI was 0.05% higher to end the year.

India’s consumer price inflation picked up to 0.71% year-on-year in November 2025, rising from October’s record low of 0.25% and broadly matching the market consensus of 0.7%. Despite the uptick, inflation remained below the Reserve Bank of India’s lower tolerance threshold of 2% for the third straight month, as food prices continued to decline (-3.91% vs. -5.02% in October), driven by softer costs for vegetables, pulses, and spices. Goods inflation also remained subdued following September’s GST rate rationalization. Price pressures eased further in categories such as clothing and footwear (1.49% vs. 1.70%) and miscellaneous goods and services (5.64% vs. 5.71%), while housing inflation was virtually unchanged (2.95% vs. 2.96%). Meanwhile, some categories saw modest acceleration, including pan, tobacco and intoxicants (2.96% vs. 2.87%) and fuel and light (2.32% vs. 1.98%).

The consumer price inflation rate in India fell to 0.25% in October of 2025 from the downwardly revised 1.44% in the previous month, the lowest on record, and well below the market consensus of a softer slowdown to 0.48%. It was the ninth consecutive month that the inflation rate was below the Reserve Bank of India's 4% target, and the third in the sequence that was below the 2 percentage point lower tolerance bank of 2%, prompting calls for the central bank to deliver more rate cuts. Food prices, which account for nearly half of the weight of the consumer basket, fell by 5.02% annually, the sharpest decline on record, as improved weather conditions supported the production of vegetables, cereals, and pulses. Goods inflation was also tempered by the GST rate rationalization in September. Also, inflation moderated for housing (2.96%) and held below the 2% threshold for housing and light (1.98%). From the previous month, Indian consumer prices rose by 0.15%.