Headline CPI inflation increased to 1.3% year over year in December, up 62 basis points from 0.71% in November. But this month’s food inflation dropped to 2.7%, which is better than last November’s 3.9% decline. Comparing December 2025 to November 2025, this shows a 120 basis point increase in food inflation. Urban food inflation decreased by 2.09%, while rural food inflation decreased by 3.08%.
According to the official announcement, the increase in personal care and effects, vegetables, meat and fish, eggs, spices, pulses, and products was responsible for the rise in headline and food inflation in December.
Urban inflation for the month was 2.03%, up from 1.4% in November, according to the data. Additionally, it stated that food prices in cities increased from November levels. Food inflation in urban areas improved month over month, going from -3.6% in November to -2.09% in December.
In terms of rural inflation, headline inflation increased from 0.10% in November to 0.76% in December. Food inflation in rural areas also went up, from -4.05% in November to -3.08% in December. There was a small change in the housing inflation section, which was 2.86% in December 2025 as opposed to 2.95% in November.
Nonetheless, education inflation decreased little to 3.32% in December 2025 from 3.38% in November. Note that both the rural and urban sectors are included in the inflation of education. Inflation rates for transportation and communication also decreased to 0.77% in December 2025 from 0.88% in November.
Last but not least, fuel and light inflation also decreased to 1.97% from the reported 2.32% inflation rate for November 2025. For the fourth consecutive month in December, retail inflation stayed below the Reserve Bank of India’s lower tolerance limit. The central bank is required by the government to maintain inflation at 4% with a 2% cushion on each side.
