India’s retail inflation quickens to 0.71% in November from record low of 0.25% in October

India’s retail inflation quickened to 0.71% in November on an annual basis, as against a record low of 0.25% in October, on rising prices of vegetables, protein-rich items, and fuel. This marked the 10th straight month that inflation remained below the Reserve Bank of India’s medium-term target of 4%.

Food prices, which account for nearly half of the CPI basket, fell 3.91% year-on-year in November, narrowing from a 5.02% decline in October. Vegetable prices declined 22.20%, compared with a sharper 27.57% fall a month earlier.



Fuel and light inflation rose to 2.32% in November from 1.98% in October 2025.

Housing inflation stood at 2.95% year-on-year in November, marginally lower than 2.96% in October. The housing index is compiled for the urban sector only.

Aditi Nayar, Chief Economist and Head – Research & Outreach at ICRA Limited, said: "The uptick was largely led by the narrowing deflation in the food and beverages segment, even as core inflation (CPI excluding F&B, F&L, and petrol and diesel for vehicles) eased marginally between these months."

"In the F&B segment, as many as 8 of the 12 sub-segments witnessed a hardening in their YoY prints in November 2025 as compared to October 2025. Nevertheless, vegetables and pulses remained in the deflationary zone for the tenth consecutive month, while spices sustained in this territory for the seventeenth month in a row. These three items account for 24% of the F&B segment by weight, and trends in these segments have weighed on food inflation prints in 8M FY2026," she said.

Nayar added that core inflation (CPI excluding food & beverages, fuel & light, and petrol and diesel for vehicles) eased slightly to 4.4% in November 2025 from 4.5% in October 2025.

She attributed this moderation to the impact of GST rate rationalisation and a limited sequential uptick in gold prices, which restricted the month-on-month increase to just 0.1%. Core CPI inflation excluding gold eased further to 2.6% in November from 2.7% in the previous month.

RBI inflation forecast

Earlier, the Reserve Bank of India’s Monetary Policy Committee (MPC) said the central bank now 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 central bank has steadily pared back its inflation forecast over the course of the fiscal year while raising its growth projections in successive MPC meetings. The FY26 inflation outlook, first estimated at 4.2% in February, was cut to 2.6% in October.

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.

This follows the MPC’s decision to cut the policy repo rate by 25 basis points to 5.25% while maintaining a neutral stance, signalling a calibrated approach to supporting growth without compromising inflation control, as it described the Indian economy as being in a “rare Goldilocks period” of high growth and low inflation.

In a notable upward revision, the committee raised its GDP growth forecast for FY2025–26 to 7.3% from 6.8% earlier. India recorded growth of 8.0% in the September quarter, following a 7.8% expansion in the June quarter.