A shopkeeper arranges Santa Claus decorative items displayed at a market ahead of the Christmas celebrations in Srinagar, Jammu and Kashmir, on December 9, 2025. (Photo by Firdous Nazir/NurPhoto via Getty Images)
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India’s consumer inflation rose to 1.33% in December accelerating from 0.71% in the prior month.
The headline inflation number was below economists’ expectations of a 1.5% increase in the consumer price index, according to a Reuters poll.
The increase in headline inflation and rising food prices was mainly due to “increase in inflation of personal care and effects, vegetables, meat and fish, egg, spices and pulses and products,” India’s Ministry Of Statistics and Programme Implementation said in a release on Monday.
Headline inflation increased 0.76% in the rural sector and 2.03% in urban areas in December. However, fuel and light inflation rate eased at 1.97%, lower than the 2.32% print in November.
The “lower inflation print is likely to keep the hopes of one last rate cut alive” but given the start of a new CPI series from next month, the central bank can do a “better assessment of inflation and rates trajectory” from April policy, said Anubhuti Sahay, head of India Economics Research at Standard Chartered Bank.
The Reserve Bank of India expects consumer inflation to be 2% for the fiscal year ending March 2026, down from a 2.6% forecast made in October. The central bank estimated inflation at 2.9% for the three months to March, rising to 4.0% for the quarter ending September 2026.
Record-low inflation in 2025 slowed nominal GDP growth, raising concerns among policymakers and investors.
India released an early estimate last week projecting real GDP growth of 7.4% for fiscal year 2026 and nominal GDP growth of 8.0%. This was sharply lower than the 10.1% nominal GDP growth forecast in the Union Budget for the same year.
“Nominal GDP growth rate slowdown is a cause of concern,” said Rana Gupta, managing director of Indian Equities at Manulife Investment Management. He added that earnings growth has decelerated to 9-10% in fiscal year 2026 from 12-13% earlier.
Gupta told CNBC’s “Inside India” on Thursday that he expected nominal GDP growth to pick up to 10-11% in fiscal year 2027 as inflation rose.
Starting Feb. 12, India will start a new series of CPI with the base year as 2024.