Source CNBC
New Delhi, December 12, 2025 — India’s annual retail inflation accelerated modestly in November 2025, climbing to 0.71% year-on-year, up from a record low of 0.25% in October, according to official data released on Friday. The uptick reflects a slowdown in the pace of price declines for food and fuel, although overall inflation remains well below the Reserve Bank of India’s (RBI) medium-term target range of 2% to 6%.
Economists said the increase in the headline Consumer Price Index (CPI) was driven largely by a moderation in the fall of food prices, particularly vegetables, which had previously exerted strong downward pressure on inflation figures. While many food items are still cheaper compared with a year ago, the pace of decline has eased, helping push up the overall CPI.
Despite the rise, inflation remains extraordinarily low by historical standards, marking the 10th consecutive month that retail inflation stayed below the RBI’s 4% target midpoint. Analysts noted that this benign inflation environment continues to provide policymakers with flexibility on monetary policy.
Underlying Trends and Policy Outlook
Core inflation — which excludes volatile food and energy prices — edged slightly lower, reflecting subdued price pressures in housing and other non-food sectors. Some economists also pointed to recent GST rate cuts and muted fuel price movements as ongoing factors keeping broader price pressures in check.
With inflation still below the RBI’s target range, some market watchers see room for further interest rate reductions in early 2026 if economic growth weakens and price pressures remain subdued. The central bank’s next policy review is scheduled for early February.
What This Means for Consumers and Markets
For consumers, the slow rise in inflation indicates that the cost of living increases remain modest, with prices for staples and essentials still largely contained. For markets and policymakers, however, the shift signals a potential transition from the extreme lows seen earlier in the year, suggesting that inflation may gradually move toward more typical levels as base effects fade and seasonal demand picks up.
Overall, while November’s inflation data marks a clear increase from October’s historic lows, it reinforces the broader narrative of subdued price pressures in India’s economy — a trend that could shape monetary and fiscal policy discussions as the country enters 2026.
