India’s retail inflation, measured by the Consumer Price Index (CPI), stood at 1.33 per cent in December 2025, slightly higher than the 0.71 per cent recorded in November, according to official data.
Food inflation continued to remain in the negative zone at –2.71 per cent during the month, marking the seventh consecutive month of year-on-year decline in food prices. Although still negative, food inflation was marginally higher than the –3.91 per cent seen in November, reflecting some increase in prices of select food items.
According to an official statement, the rise in both headline and food inflation in December was driven by higher prices of personal care and effects, vegetables, meat and fish, eggs, spices and pulses.
Despite this, the overall inflation outlook remains comfortable. The Reserve Bank of India’s Monetary Policy Committee (MPC) last month lowered its inflation forecast for 2025–26 to 2 per cent from 2.6 per cent projected earlier, citing a sharp fall in food prices and the impact of GST rate cuts.
RBI Governor Sanjay Malhotra recently announced a 25 basis point cut in the repo rate to 5.25 per cent, as easing inflation has created space for the central bank to support economic growth. He said that strong GDP growth of 8.2 per cent in the second quarter of the current financial year, along with low inflation, had created a favourable “Goldilocks period” for the economy.
The Governor also noted that headline inflation has eased more than earlier expected due to exceptionally low food prices, leading to a downward revision in inflation projections for both 2025–26 and the first quarter of 2026–27.
Core inflation, which excludes food and fuel, has remained largely contained. Excluding the impact of gold prices, core inflation moderated to 2.6 per cent in October, indicating that price pressures are becoming more broad-based.
The RBI said food supply conditions have improved due to higher kharif output, healthy rabi sowing, adequate reservoir levels and favourable soil moisture. Global commodity prices, except for some metals, are also expected to soften, supporting a stable inflation outlook in the coming months.
-IANS
