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India's CPI Jumps to 1.3% Amidst Rising Food Costs
12 Jan
Summary
- Headline CPI inflation reached 1.3% in December, a rise from November's 0.71%.
- Food inflation increased in December after months of decline.
- Retail inflation has remained below RBI's target for four consecutive months.
In December 2025, India's headline Consumer Price Index (CPI) inflation climbed to 1.3% year-on-year, an increase of 62 basis points from the 0.71% recorded in November. This rise has been primarily attributed to escalating costs in categories such as personal care, vegetables, meat, fish, eggs, spices, and pulses. While headline inflation moved upward, food inflation experienced a rebound.
Despite the overall increase in headline inflation, food inflation in urban areas saw a month-on-month improvement, standing at -2.09% in December compared to -3.6% in November. However, rural food inflation contracted by 3.08%. Overall, retail inflation has stayed below the Reserve Bank of India's lower tolerance limit for four consecutive months as of December 2025.
Economists predict that FY26 CPI inflation may undershoot the RBI's estimate, potentially leading to a 25 basis points rate cut in February 2026. Meanwhile, inflation in housing, education, transport, and fuel segments saw a slight decline in December.
