Retail Inflation in India Rises to Three-Month High in December
New Delhi – In a recent report, it was revealed that retail inflation in India saw a significant increase, reaching a three-month high of 1.33% in December. This surge was primarily driven by higher prices of food items, although it still remained below the Reserve Bank of India’s lower tolerance level.
The Consumer Price Index (CPI) based headline inflation was recorded at 0.71% in November, a significant decrease from the 5.22% reported in December 2024. Notably, inflation had stood at 1.44% in September of the same year.
Food inflation in December was at a negative 2.71%, an improvement from the negative 3.91% seen in November, marking the seventh consecutive month of negative food inflation.
According to the National Statistics Office (NSO), the rise in headline inflation and food inflation during December 2025 was primarily attributed to increases in inflation of personal care products, vegetables, meat and fish, eggs, spices, pulses, and related items.
Urban areas experienced higher headline inflation at 2.03% compared to 0.76% in rural India.
It is noteworthy that retail inflation has remained below the Reserve Bank of India’s lower tolerance limit for the fourth consecutive month in December.
The government has mandated the central bank to maintain inflation at 4%, with a margin of 2% on either side.
Based on NSO data, the top five states with high inflation in December were Kerala (9.49%), Karnataka (2.99%), Andhra Pradesh (2.71%), Tamil Nadu (2.67%), and Jammu and Kashmir (2.26%). Conversely, retail inflation was negative in Assam, Bihar, Haryana, Madhya Pradesh, Odisha, and Uttar Pradesh.
December’s inflation data marks the end of the current series (2012), with January’s data set to be calculated under a new CPI series with the base year of 2024.
The upcoming series is expected to bring about a comprehensive revision aimed at enhancing the quality, accuracy, and representativeness of inflation data.
Aditi Nayar, Chief Economist at Icra, noted that retail inflation rose to 1.3% in December 2025 from 0.7% in November, slightly below Icra’s estimate of 1.4% for the month. The increase was driven by a narrowing deflation in the food and beverages segment.
Dipti Deshpande, Principal Economist at Crisil, anticipated a rise in CPI inflation to 5% in fiscal 2027 from an estimated 2.5% in the current fiscal year as food inflation normalizes.
Paras Jasrai, Associate Director at India Ratings and Research, highlighted that core inflation reached a 28-month high of 4.6% in December 2025, with personal care items like gold and silver experiencing a notable price increase.
Overall, retail inflation dropped to a record low of 0.8% in 3Q FY26, marking the second consecutive quarter of inflation levels falling outside the lower tolerance band of the Reserve Bank’s Monetary Policy Committee.
The NSO collects price data from selected urban markets and villages across all states and union territories.
