India retail inflation likely inched up to 1.6% in December: Mint poll
As food deflation eases and base effects fades, the inflation print in December could likely be the highest in four months and mark the end of ultra-low price trend witnessed across most of 2025.
India’s retail inflation likely inched up to 1.6% in December from 0.7% in November, driven by shallower deflation in food items and the fading impact of a favourable base effect, according to a Mint poll of 15 economists. This would mark what economists describe as the final month of the country’s ultra-low inflation.
Economists surveyed in the poll expect the Consumer Price Index (CPI) to come in within a wide range of 1.3-2.3% in December. If the poll’s median projections prove accurate, this would be the fifth time in the past six months that inflation has fallen below the lower band of the Reserve Bank of India’s (RBI) 2-6% inflation target mandate.
The official data is scheduled to be released on 12 January.
“We expect CPI inflation to have increased in December 2025 led by shallower deflation in food and beverage CPI and higher core inflation," said Dhiraj Nim, economist at ANZ Bank.
Food inflation, which accounts for nearly 40% of the overall inflation basket, has been in negative territory since June 2025. However, economists are now observing a sequential pick-up, signalling that the deflationary trend is bottoming out.
Radhika Rao, economist at DBS Bank, said that “sequential firmness in food and precious metals likely added to the lift in the month, besides seasonal pressure on services (ex-housing)."
The statistical impact of a high base is also waning. Retail inflation had slowed to 5.2% in December 2024 from 5.5% in November 2024, before easing further to 4.3% in January and 3.6% in February 2025.
“We expect December CPI inflation to be the last month close to the lower end of the tolerance band, as prices will likely start picking up from January onwards, mostly on unfavourable base effects, tobacco price hikes and rising gold prices," said Rahul Bajoria, economist at Bank of America, in a note dated 5 January.
The poll’s December projection would place the average inflation rate for the third quarter of fiscal year 2025-26 at 0.9%, marginally higher than the RBI’s average projection of 0.6% for the same quarter.
Citing this upward drift in inflation projection, ANZ Bank’s Nim noted that if this trend continues, the RBI may turn a “little cautious on its inflation outlook". Since February last year, the central bank has cut interest rates by a cumulative 125 bps due to record low inflation even as GDP growth overshot expectations.
Core inflation, which excludes volatile items like food and fuel, is expected to remain elevated and above 4% due to surging gold prices, adding another layer of upward price pressure as the year progresses.
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