India's retail inflation saw a slight uptick in November 2025, climbing to 0.71% from a record low of 0.25% the previous month. According to government data released on Friday, December 12, 2025, the rise in the Consumer Price Index (CPI) was primarily driven by increasing prices of vegetables, protein-rich items such as eggs, meat, and fish, as well as fuel and light. The data was released by the National Statistics Office (NSO).

Despite the increase, retail inflation has remained below the Reserve Bank of India's (RBI) medium-term target of 4% for the tenth consecutive month. This figure also stayed within the RBI's 2% to 6% target range for the third consecutive month.

Food inflation, while still negative, showed a noticeable increase. Deflation in food items was recorded at 3.91% in November, compared to 5.02% in October. A significant contributor to this shift was the change in vegetable prices, which fell 22.20% in November, a smaller decline compared to the 27.57% drop recorded in October. The rise in headline and food inflation during November 2025 is mainly attributed to an increase in inflation of vegetables, eggs, meat and fish, spices, fuel and light, the NSO said. Fuel and light inflation for November was 2.32% against 1.98% in October 2025.

The Reserve Bank of India had earlier this month significantly lowered its inflation projection for the current fiscal year to 2% from the 2.6% estimated previously, noting the rapid disinflation the Indian economy is experiencing. The central bank has been steadily revising its inflation forecast downwards while simultaneously increasing its growth projections in recent Monetary Policy Committee (MPC) meetings. The FY26 inflation outlook, initially projected at 4.2% in February, was revised to 2.6% in October.

In response to the economic landscape, the MPC had reduced the policy repo rate by 25 basis points to 5.25%, maintaining a neutral stance. This decision reflected a strategy aimed at stimulating growth without compromising inflation control. The RBI has cut interest rates by 125 basis points in 2025. Furthermore, the MPC raised its GDP growth forecast for FY26 to 7.3%, up from the previous estimate of 6.8%. India recorded an 8% growth in the September quarter, and 7.8% in the June quarter. India's 8.2% GDP growth in July-September has encouraged the government to raise its growth projection to 7% or more from 6.3% to 6.8% earlier.

The central bank expects inflation to average 2.0% in the current fiscal year, sharply lower than its earlier projection of 2.6% and also below the 2.2% estimate from a Reuters poll conducted a month earlier. The MPC also released updated quarterly inflation projections, forecasting 0.6% in Q3, 2.9% in Q4, 3.9% in Q1, and 4.0% in Q2 of FY27. By comparison, the October policy round had projected inflation at 1.8% in Q3, 4.0% in Q4, and 4.5% in Q1 of FY27.

Experts suggest that policies enacted by Indian Prime Minister Narendra Modi, including consumer tax cuts and labour reforms, are expected to mitigate the impact of U.S. tariffs on the Indian economy. The Indian economy is in a "rare goldilocks" phase of strong economic growth and moderate inflation.