India’s retail inflation accelerated in December 2025, rising to around 1.3–1.33 per cent year-on-year, marking the highest level in three months after remaining subdued for much of the year. This upturn follows a 0.7 per cent reading in November, as price pressures began to strengthen across several major categories, according to government data.

Key Highlights

• India’s retail inflation rose to a three-month high of 1.3% in December.
• Price pressures increased due to higher costs of vegetables, pulses, and personal care items.

The increase was driven by higher costs in a range of consumer goods, including personal care products, vegetables, meat and fish, eggs, spices and pulses, which contributed to the rise in the overall Consumer Price Index (CPI). While food inflation continued to remain in negative territory, the rate of decline in food prices narrowed compared with the previous month, adding to the headline inflation increase.

Despite this rise, retail inflation has stayed well below the Reserve Bank of India’s (RBI) medium-term target of 4 percent for the eleventh consecutive month, reflecting a generally benign inflation environment. Analysts note that the inflation trend remains muted, with the subdued price pressures allowing the RBI to maintain an accommodative monetary policy stance.

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The December figure is expected to be the final CPI reading under the current base year of 2012, with the index switching to a new base year of 2024 starting from the January 2026 release. This methodological change could influence the way inflation trends are measured and reported in the months ahead.

Overall, while inflation has inched higher, it remains within comfortable limits, driven by a combination of shifting food price dynamics and broad economic conditions.