India’s inflation rate, measured by the Consumer Price Index (CPI), rose marginally to 1.33% in December 2025 from 0.71% in November. Food inflation stayed negative at (-) 2.71% for the seventh consecutive month, providing relief to households. However, this figure was slightly higher than the (-) 3.91% recorded in November.
The uptick in headline and food inflation in December 2025 was driven by increased inflation in personal care products, vegetables, meat, fish, eggs, spices, and pulses, as per an official statement. Despite this, the overall inflation outlook remains favorable. The Reserve Bank of India’s (RBI) monetary policy committee (MPC) revised down its forecast for India’s inflation rate for the fiscal year 2025-26 to 2% from 2.6% due to lower food prices and GST rate cuts.
RBI Governor Sanjay Malhotra announced a 25 basis points reduction in the repo rate to 5.25% from 5.5% to support growth amidst declining inflation. He highlighted the Indian economy’s rare “Goldilocks period” with a growth surge of 8.2% in the second quarter and inflation at 1.7%.
“The MPC noted that headline inflation has eased significantly and is likely to be softer than the earlier projections, primarily due to benign food prices. Reflecting these favorable conditions, the inflation projections for 2025-26 have been revised downwards,” Malhotra stated. Core inflation, excluding food and fuel, remained contained, with a moderation to 2.6% in October, despite price pressures from precious metals.
Malhotra emphasized improved food supply prospects supported by robust kharif production, healthy rabi sowing, adequate reservoir levels, and favorable soil moisture. With the exception of certain metals, international commodity prices are expected to stabilize in the future.
