India’s retail inflation rose to 1.33% in December, up from 0.71% in November, as the pace of decline in food prices slowed, according to government data released on Monday. Despite the increase, inflation remains well below the Reserve Bank of India’s tolerance band.
Food prices continued to remain in deflation, falling 2.71% year-on-year in December, compared to a sharper decline of 3.91% in November. Vegetable prices also stayed lower, dropping 18.47% annually, though the fall was less steep than the 22.20% decline recorded in the previous month.
The overall benign inflation environment, coupled with strong economic growth, prompted the RBI to cut the repo rate by 25 basis points last month. Economists now expect further rate cuts if inflation continues to stay under control.
India’s economy is projected to grow at 7.4% in the current fiscal year ending in March, providing resilience as the country navigates global challenges, including the impact of higher US tariffs.