India’s Retail Inflation Rises to 1.33% in December as Food Price Deflation Eases
India’s key inflation rate rose at its fastest pace in three months in December as the decline in food prices slowed, official data released on Monday showed. Annual retail inflation quickened to 1.33% in December from 0.71% in November, coming slightly below a Reuters poll forecast of 1.5%. Inflation has now remained below the Reserve Bank of India’s target band of 2%-6% for the fourth consecutive month.
Food prices remained in deflation but eased from the previous month, with prices falling 2.71% year-on-year in December versus a 3.91% decline in November. Vegetable prices dropped 18.47%, softer than the 22.20% fall recorded a month earlier, signalling a gradual moderation in the pace of food price correction. Economists expect inflation to inch up in the coming months, although still likely to remain below 4% until mid-2026.
The inflation update comes after the RBI cut interest rates by 25 basis points last month, supported by benign inflation and strong growth momentum, with some economists expecting another cut. The central bank’s next monetary policy decision is scheduled for February 6. India will also roll out a new CPI series next month with 2024 as the base year, which could influence inflation estimates going forward.
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