According to Union Bank of India forecasts, India’s retail inflation is likely to have risen to 1.66 percent in December 2025 from 0.71 percent in November, driven by a rise in food prices across most segments.The official December Consumer Price Index (CPI) data is expected to be released on January 12, 2026, or the next business day if the date is a holiday.Despite the sequential increase, inflation is expected to remain well below the 5.2 percent recorded in December 2024, even as the favorable base effect begins to fade, the bank said. Core inflation, which excludes food and fuel, is expected to rise to 4.68 percent, largely due to a fresh rally in gold prices in December, news agency ANI reported.Food inflation is expected to remain in negative territory, although less sharply than in November. “We expect the consumer price index for food to be -1.19% against -2.78% last month and a high base of 7.7% last December,” the Union Bank of India report said, pointing out that food prices increased month-on-month in most categories, except for a few segments like milk. The rating is based on local prices collected by the Ministry of Consumer Affairs.According to the report, tomatoes saw the strongest price increases as early winter boosted demand while October rains disrupted supply. The bank warned that food inflation is expected to remain broadly negative in the third quarter of fiscal 2026, but there are upside risks from unseasonal winter rains and possible supply chain disruptions.Since inflation is largely under control, the Reserve Bank of India In December, the country cut its CPI inflation forecast for 2025-2026 to 2.0 percent from 2.6 percent previously. The quarterly forecasts put inflation at 0.6 per cent in the third quarter and 2.9 per cent in the fourth quarter, before rising to 3.9 per cent in the first quarter of 2026-27 and 4.0 per cent in the second quarter, still within the RBI’s target range.RBI Governor Sanjay Malhotra described the current macroeconomic situation as a “rare Goldilocks period” of strong growth and very low inflation, ANI reported. His comments followed the central bank’s decision to cut the repo rate by 25 basis points to 5.25 percent in December, with nearly 80 percent of the consumer price index showing inflation below 4 percent, indicating broad-based easing.
