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In the bustling markets of Srinagar, Jammu and Kashmir, a shopkeeper meticulously arranges Santa Claus decorations as the city gears up for Christmas celebrations on December 9, 2025. (Photo by Firdous Nazir/NurPhoto via Getty Images)
Image Credit: Nurphoto via Getty Images
Inflation in India has seen a noticeable uptick, with consumer inflation climbing to 1.33% in December, up from 0.71% the previous month.
This inflation figure was slightly below the 1.5% increase anticipated by economists, based on a Reuters survey of expert predictions for the consumer price index.
The rise in inflation, coupled with increasing food prices, can be attributed to higher costs in personal care items, vegetables, meat and fish, eggs, spices, and pulses, as reported by India’s Ministry of Statistics and Programme Implementation on Monday.
In December, headline inflation rose by 0.76% in rural areas and 2.03% in urban regions. Meanwhile, the inflation rate for fuel and lighting decreased to 1.97%, compared to November’s rate of 2.32%.
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.
