NEW DELHI: India’s benchmark inflation rate stayed on the lower side of RBI’s target band of 4% plus or minus 2% for the fourth consecutive month in December 2025. The 1.3% retail inflation value, as measured by the annual growth in Consumer Price Index (CPI), is mostly a result of easing but persisting deflation in food prices, which is more than compensating for inflationary tailwinds from sources such as precious metals.
The latest inflation reading also means that quarterly inflation in the period ending December 2025, was 0.76%, the lowest ever in the current series and the second consecutive quarter when it stayed below the lower end of RBI’s target band. To be sure, the December quarter inflation print is slightly higher than the 0.6% projected by RBI in its December Monetary Policy Committee (MPC) resolution. Headline inflation has stayed below RBI’s actual target of 4% for four consecutive quarters now.
CPI growth in the month of December 2025 was 1.33% according to data released by the National Statistical Office (NSO) on Monday. This is marginally lower than the 1.56% projected by a Bloomberg poll of economists. The December inflation print marks an increase in monthly inflation compared to 0.7% reading in the month of November and is in keeping with forecasts which expect inflation to increase going forward. RBI’s December MPC resolution expects quarterly inflation for the periods ending March 2026, June 2026, September 2026 and December 2026 at 2.9%, 3.9%, 3.9% and 4% respectively.
This is the last release of CPI with 2012 as the base. The revised CPI series with 2024 as the base will be released on 12, February, the NSO release said.
December’s low headline print is primarily a result of falling food prices. Food items, which account for 39% of the current CPI basket, saw an annual price contraction of 2.7% in December, the seventh consecutive monthly contraction under this category. The major reason for a contraction in the food category was a sharp fall in vegetable and pulse prices with the respective subcategories witnessing a contraction of 18.5% and 15.1% in December. To be sure, the pace of contraction in food prices has been easing gradually in the past few months