India’s retail inflation likely rose to 1.66% in December as food prices rise: report

Food inflation likely remained negative in December, even as food prices rose month-on-month in most food segments.

Retail inflation data for the December 2025 CPI will be published on January 12, 2026, or the next business day if January 12 is a public holiday.

Retail inflation or the consumer price index (CPI) likely peaked from November but remained well below December 2024’s 5.2 percent, even as the base effect continues to lose strength, according to the Bank’s projections.

However, core inflation is likely to have risen to 4.68 percent as gold prices resumed their recovery in December. Core inflation measures generally exclude food and fuel.

Food inflation likely remained negative in December, even as food prices rose month-on-month in most food segments.

“We expect food CPI to print -1.19 per cent, down from -2.78 per cent last month and a high base of 7.7 per cent last December. Subsequently, food inflation has picked up as food prices across the board (barring a few segments like milk) continued to gain momentum during the month, as reflected in on-the-ground (OTG) prices collected by the Department of Consumer Affairs,” the Union Bank of India report said.

According to the report, the biggest price increase was seen in tomatoes as the early onset of winter led to a spike in demand and October rains affected supply.

“Food inflation is expected to remain largely negative in Q3 26; however, upside risk remains from unusual winter rains and resulting supply chain disruptions,” the Bank’s report said.

With inflation under control, the RBI in December revised its CPI inflation forecast for 2025-26 to 2.0 per cent, down from the previous estimate of 2.6 per cent. Quarterly projections show inflation of 0.6 percent in the third quarter and 2.9 percent in the fourth quarter, before rising to 3.9 percent in the first quarter of 2026-2027 and 4.0 percent in the second quarter, still within the central bank’s target of 2 to 6 percent.

RBI Governor Sanjay Malhotra, after the December MPC meeting, characterized India’s current macroeconomic environment as a “rare Goldilocks period” characterized by high economic growth and exceptionally low inflation.

The comments came as the Reserve Bank announced its latest monetary policy decision, cutting the repo rate by 25 basis points to 5.25 percent, after its three-day review meeting that concluded on December 5.

Nearly 80 percent of the CPI package recorded inflation below 4 percent, indicating broad-based easing for goods and services.

The RBI governor had asserted that inflation is likely to remain softer than earlier expected, supported by higher kharif output, healthy rabi sowing and favorable commodity trends.

Published on January 4, 2026