New Delhi: India’s retail inflation (CPI) rose to a three-month high of 1.33 per cent in December 2025, driven primarily by higher prices of food items and personal care products, although it continued to remain below the Reserve Bank of India’s lower tolerance limit for the fourth straight month.

According to the National Statistics Office (NSO), headline Consumer Price Index inflation increased from 0.71 per cent in November, while remaining significantly lower than the 5.22 per cent recorded in December 2024. The December figure compares with 1.44 per cent reported in September.

Food inflation remained in negative territory for the seventh consecutive month at (-) 2.71 per cent, improving from (-) 3.91 per cent in November. The NSO noted that the uptick in headline and food inflation was largely due to rising prices of vegetables, meat and fish, eggs, pulses, spices, and personal care items.

Urban inflation was recorded at 2.03 per cent, compared with 0.76 per cent in rural India.

The government mandates the RBI to maintain inflation at 4 per cent, with a tolerance band of ±2 per cent. Despite the recent increase, retail inflation has remained below the lower threshold for four consecutive months.

Among major states, Kerala recorded the highest inflation at 9.49 per cent, followed by Karnataka (2.99 per cent), Andhra Pradesh (2.71 per cent), Tamil Nadu (2.67 per cent) and Jammu and Kashmir (2.26 per cent). Retail inflation was reported to be negative in Assam, Bihar, Haryana, Madhya Pradesh, Odisha and Uttar Pradesh.

The December data marks the final release under the current CPI 2012 series. From January onwards, inflation will be calculated under a new CPI base year 2024 = 100, incorporating revised coverage, basket weights and methodology. The updated series will be released in February and is aimed at improving data accuracy, representativeness and reliability.

Economists said the latest numbers indicate narrowing food deflation and firming price pressures.

Aditi Nayar, Chief Economist at ICRA, said inflation rose broadly in line with expectations but advised policy caution ahead of the new CPI and GDP base series. Crisil’s Dipti Deshpande noted that inflation could edge higher as the base effect fades, estimating CPI to rise to 5 per cent in FY27 from 2.5 per cent in the current fiscal.

India Ratings’ Paras Jasrai highlighted that core inflation climbed to a 28-month high of 4.6 per cent, driven by personal care inflation linked to higher gold and silver prices.

Overall, retail inflation averaged 0.8 per cent in Q3 FY26, marking a second consecutive quarter below the RBI’s tolerance band.

The NSO collects CPI data from 1,114 urban markets and 1,181 villages across all states and Union Territories.

PTI