Retail inflation rises to 1.33% in December 2025, still lower than RBI’s lower comfort level

Retail inflation quickened to a three-month high of 1.33% in December 2025, which is still significantly lower than the Reserve Bank of India’s lower comfort level of 2%, official data released on Monday (January 12, 2026) showed.

Data on the Consumer Price Index for December 2025, released by the Ministry of Statistics and Programme Implementation, shows that the low levels of retail inflation are a result of a broad-based decline in price levels across sectors. The RBI targets an inflation rate of 4%, with a comfort band of 2% above and below that.

The food and beverages category, for example, saw a contraction in prices of 1.85% in December 2025, a moderation from the contraction of 2.8% seen in November. This is likely due to a high base effect as inflation in this category stood at 7.7% in December last year.

Inflation in the ‘pan, tobacco and intoxicants’ category remained unchanged at 2.96% in December 2025 as compared to November. 

The clothing and footwear category saw inflation easing marginally to 1.44% in December 2025 from 1.49% in the previous month. Inflation in this category had been 2.7% in December 2024.

The housing sector, too, saw inflation easing somewhat to 2.86% in December 2025 from 2.95% in the previous month. The fuel and light category saw inflation ease to 1.97% in December 2025, as compared to 2.3% in November.