India’s retail inflation rose to 1.33% in December 2025, the highest in three months, up from 0.71% in November. The increase was mainly due to slower falls in food prices and higher costs for items like vegetables, meat, eggs, pulses, spices, and personal care products.
Despite the rise, inflation remains well below the RBI’s target range of 4% ±2%, staying under the lower comfort limit of 2% for the eleventh month in a row. Food inflation, while still negative, eased compared with November, helping lift overall prices.
Both urban and rural areas saw rising prices, with urban inflation increasing faster. Some sectors, such as housing, education, and health, showed mixed trends, with housing costs slightly easing.
Economists say that even with this increase, inflation is still low by historical standards, and core inflation (excluding food and fuel) remains modest, indicating limited demand pressure.
The low inflation gives the RBI room to keep monetary policy accommodative. In 2025, the central bank cut interest rates, and with inflation below the comfort level, there is scope to support economic growth further. Policymakers will keep an eye on new data, especially with the upcoming revised CPI series using 2024 as the base year.
Also Read: Germany eases air transit rules for Indians