Retail Inflation in India (November 2025)
Retail inflation in November 2025 was recorded at 0.7%, marking the second-lowest level in the current data series, following the lowest rate ever in October 2025.
Key Takeaways
- The decline in inflation is significantly influenced by statistical base effects, which are expected to diminish soon.
- Inflation in October and November 2024 was 6.2% and 5.5%, respectively, leading to a gradual decrease, reaching 1.6% by July 2025.
- The Consumer Price Index (CPI) is heavily skewed towards the food and beverages category, which holds nearly 46% weightage. This gives the category a disproportionate impact on the overall inflation rate.
- Food prices contracted by 2.8% in November 2025, largely due to a high base of 8.2% in November 2024, affecting the entire index.
Upcoming Changes
- The government plans to release a new CPI series in the first quarter of 2026-27, updating the base year to 2024 from 2012.
- This new series will adjust weightages to better reflect Indian consumption behavior, reducing the overwhelming influence of food prices on inflation.
- The new base year will help address the statistical base effects.
Monetary Policy Implications
The Reserve Bank of India's Monetary Policy Committee (MPC) has used current inflation data to inform its decisions:
- In December 2025, the MPC cut interest rates by 25 basis points to 5.25%.
- Despite predictions of slower economic growth in the second half of the year, the MPC should pause rate cuts in February 2026.
- In 2025, rates have been cut by 125 basis points, the most significant since 2019.
Recommendations
- Allow time for the impact of fiscal policy, following the passage of Budget 2026, before altering monetary policy further.
- Examine the new CPI series to understand how rate cuts may impact the revised index and its redistributed weights.
