Retail Inflation Rises to Three-Month High of 1.33% in December on Food Price Pressures

Headline Inflation Moves Up but Stays Below Tolerance Band​

India’s retail inflation edged up to a three-month high of 1.33 per cent in December, driven largely by higher prices of select food items. Despite the uptick, inflation remained below the lower tolerance level set by the Reserve Bank of India.

The Consumer Price Index based headline inflation stood at 0.71 per cent in November, compared with 1.44 per cent in September. In December last year, headline inflation had printed at 5.22 per cent.

Food Inflation Remains in Deflation for Seventh Month​

Food inflation continued to stay in negative territory for the seventh consecutive month, registering (-) 2.71 per cent in December. However, the overall rise in headline inflation was attributed to increased prices across several categories, including personal care and effects, vegetables, meat and fish, eggs, spices, and pulses and products.

Urban Inflation Outpaces Rural Areas​

Inflationary pressures were more pronounced in urban centres, where headline inflation stood at 2.03 per cent in December. In comparison, rural inflation was significantly lower at 0.76 per cent, highlighting a widening rural-urban divergence in price trends.

Inflation Below Lower Threshold for Fourth Straight Month​

December marked the fourth consecutive month in which retail inflation remained below the lower tolerance limit. The central bank is mandated to maintain inflation at 4 per cent, with a margin of 2 per cent on either side.

States with Highest and Lowest Inflation​

Among states, Kerala recorded the highest retail inflation in December at 9.49 per cent, followed by Karnataka at 2.99 per cent, Andhra Pradesh at 2.71 per cent, Tamil Nadu at 2.67 per cent, and Jammu and Kashmir at 2.26 per cent.

In contrast, retail inflation was negative in Assam, Bihar, Haryana, Madhya Pradesh, Odisha, and Uttar Pradesh during the month.

Core Inflation and Quarterly Trend​

Core inflation rose sharply in December, reaching a 28-month high of 4.6 per cent. Inflation in personal care items surged to 28.1 per cent, largely reflecting higher gold and silver prices.

On a quarterly basis, retail inflation eased to a record low of 0.8 per cent in the third quarter of FY26. This marked the second consecutive quarter in which inflation remained outside the lower end of the central bank’s tolerance band.

Data Coverage​

The Consumer Price Index data is compiled by the National Statistics Office, which collects price information from 1,114 urban markets and 1,181 villages across all states and Union Territories.