India’s retail inflation remains below RBI’s lower band for fourth month at 1.33% in December

Retail inflation reached 1.33% in December, up slightly from 0.71% in November, as a benign base effect and weak food prices kept the headline figure in check.

The December CPI inflation data comes just ahead of the Union Budget 2026-27 on February 1 and the Reserve Bank of India’s Monetary Policy Committee (MPC) meeting from February 4-6.

Although CPI inflation data will be crucial for each of these two major political events, it will also be the last data in the current CPI series. Starting in February, a new CPI series with a base year of 2024 will be launched with an updated basket of items and methodology that will provide retail inflation estimates for January 2026.

“This is the final release of CPI for base 2012 = 100. The revised CPI series for base 2024 = 100 will be released on February 12, 2026 (Thursday) or the next working day if the 12th is a public holiday,” said the statement issued by the Ministry of Statistics and Program Implementation on Monday.

This will be the first revision of the CPI in a decade. The current series, with a base year of 2012, was released in January 2015. The new series would mark a significant milestone in India’s data updating exercise. Later in the month, on February 27, the new GDP series with base year 2022-23 for the second advanced GDP estimates for FY27 will also be released. In May 2026, an updated series of the industrial production index will also be released.

Analysts expect retail inflation to rise in the coming months and also factor in another 25 basis point rate cut by the MPC in the coming months, but remain uncertain about the timing, noting that the new CPI and GDP series will shed more light on the macroeconomic scenario.

“While the December 2025 MPC minutes suggest the possibility of another rate cut in February 2026, ICRA believes that a pause is warranted at the current juncture. Further, it would be prudent to wait and evaluate the updated CPI (base: 2024) and GDP (base: 2022-23) series, expected to be released later in February, as they will determine the current growth-inflation mix and help to form new perspectives,” said Aditi. Nayar, Chief Economist and Head of Research and Outreach, ICRA.

Paras Jasrai, associate director at India Ratings and Research, noted that retail inflation in December 2025 was at a three-month high and the slight rise was largely due to easing food deflation. Food deflation fell to 2.7% in December 2025, from 3.9% the previous month. The agency expects next month’s final policy for FY26 to opt for a 25 basis point cut in policy rates, which could be the last easing in the current cycle by the MPC.