India retail inflation seen at 1.66% in December due to food price rise: Report

India’s retail inflation likely inched up to 1.66% in December 2025, from 0.71% in November, driven mainly by rising food prices , according to Union Bank of India . The official CPI data will be released on January 12, 2026.

Even with this increase, inflation remains well below the 5.2% recorded in December 2024 and the RBI’s 4% target, indicating that overall price pressures are still very soft. The central bank’s tolerance band is 2-6%, placing current inflation comfortably at the lower end.

The rise in December was largely due to food prices, although overall food inflation is still negative at -1.19% , compared to -2.78% in November . Tomatoes recorded the sharpest price rise, while milk remained stable. Core inflation, excluding food and fuel, likely rose to 4.68%, mainly due to higher gold prices.

Inflation has remained unusually low this year because of strong agricultural output, healthy rabi sowing, stable global commodity and fuel prices, and a favourable base effect . Nearly 80% of the CPI basket is recording inflation below 4%, showing broad-based moderation.

The RBI expects inflation to remain benign, revising its forecast for 2025–26 to 2.0%. With the repo rate cut to 5.25%, borrowing costs are lower, and the central bank has described the current phase as a “rare Goldilocks period” , meaning strong growth with low inflation and stable economic conditions.

For consumers, this means stable prices, more purchasing power, manageable grocery bills, and cheaper loans, allowing households to spend and plan with confidence. While some items like tomatoes have spiked, overall essentials remain affordable, keeping everyday life less financially stressful.