Jan 12 – India’s annual retail inflation rose to 1.33% in December from 0.71% in November, government data showed on Monday.
A Reuters poll had projected retail inflation at 1.5%.
COMMENTARY:
DHIRAJ NIM, FX STRATEGIST, ANZ BANK, MUMBAI
“CPI inflation was a downside surprise versus market expectations for the month, but upside surprise with respect to the RBI 0.6% forecast for Q4 2025. The actual is 0.8%. The RBI may view this cautiously but there is nothing to be alarmed about as core CPI excluding gold remains weak, warranting continued monetary policy support. We do not expect more rate cuts, but certainly more liquidity infusion, given base money growth has weakened much below nominal GDP growth.”
SUVODEEP RAKSHIT, CHIEF ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI
“CPI inflation at 1.3% remains quite benign, with food remaining in deflation. Core inflation excluding gold at 2.3% continues to point to a slack in the economy. We believe that while CPI inflation is reverting from its trough, it is likely to remain well anchored around the RBI’s 4% target over the next couple of quarters. Today’s print keeps the window open for the RBI to act in the upcoming February policy, especially as inflation remains well below the lower bound of its target range. We await the introduction of the new CPI series, though it is unlikely to deviate significantly from the current trend.”
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
“India’s CPI inflation came in line with our estimate of 1.38% as the softness in food prices persisted. We expect FY26 CPI inflation to undershoot RBI’s estimate by 10 to 15 bps and thus expect a 25bps rate cut in Feb 2026.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“India’s inflation bounced off lows as favourable base effects diminished, selected food categories rose on a sequential basis, and precious metals firmed up. Nonetheless, the still benign headline number points to slack in the economy, which allows the central bank with the room to retain its accommodative bent on policy. While guidance could remain dovish, we don’t expect further rate reductions.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The headline CPI inflation came in softer than expectations on deeper deflation in food. Meanwhile, the core inflation remained largely led by higher gold and silver prices.
The inflationary trend remains fairly benign, creating room for the last rate cut in the upcoming policy. However, we reckon that it will be a very close call, especially as the inflation and GDP data will be completely revamped by end-February.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“Inflation inched up marginally in December as the base effect was less favourable and gold prices were higher in the month. We believe the bottom for inflation is now behind us and inflation could continue to edge up over the coming month, although still expected to remain well below 4% uptill mid-2026. Overall inflation remains comfortably below 2% for now suggesting that the overall inflation dynamics remain favourable. With today’s print, inflation has averaged at 0.77% in Q3 marginally higher than the RBI’s estimate of 0.6%. We expect an average of 2.8% for Q4.
However, we do not expect a further rate cut in the Feb policy by RBI as growth continues to hold up and the focus is likely to be on supplying liquidity to enable transmission of past rate cuts. We estimate inflation at 4% in FY27 vs. 2% in FY26. Although these estimates could be influenced by the new series data that is to be released for CPI from the next month.”
(Reporting by Hritam Mukherjee, Nishit Navin, Mridula Kumar and Urvi Dugar in Bengaluru; Compiled by Chandini Monnappa; Editing by Harikrishnan Nair)
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