Inflation, measured by the consumer price index (CPI), rose sequentially from a series low of 0.25% in October to 0.71% in November, under the twin impact of a waning favourable base and an easing of deflation in food prices.
Core inflation excluding precious metals was benign at 2.4%, indicating that the price pressures for mass consumption items were not building up in a serious way in the second month of the current quarter. The Reserve Bank of India’s sharp downward revision of the inflation forecast for the October-December quarter to 0.6% from 1.8% seems to hold good.
It is for the third straight month that the inflation has stayed below the lower end of the RBI’s tolerance band which kept the hopes alive of another rate cut. In view of the softness in food prices and other factors, the RBI had in its December policy cut the inflation target for 2025-26 to 2% from 2.6% forecast earlier, and delivered a 25 basis cut in repo rate to 5.25%.
The negative inflation in food prices was recorded at -3.91% in November, up from -5.02 in October. The key food disinflation drivers in November were the lower prices of vegetables and pulses when compared to last year.
Soft core inflation supports hopes for rate cut
In November last year the CPI inflation was 5.48% and food inflation was 9.04%. Core inflation that excludes fuel and food eased slightly to 4.23% in November 2025 from 4.33% in October 2025.
Outside the food basket, a strong rise in precious metal prices supported core inflation. “Excluding precious metals, core inflation stood at 2.4%. Despite these pressures, the positive impact of GST rationalisation and continued deflation in the food and beverages category helped keep the overall inflation print comfortable,” chief economist at CareEdge Ratings Rajni Sinha said.
Analysts Forecast Uptick Ahead of Next MPC Meet
Looking ahead, the y-o-y prints for most food items have hardened during December 1-11, 2025 vis-à-vis November 2025, even as a fairly large number of these remained in the deflationary zone. Tomato prices, in particular, have surged in early December 2025, which may temper the typical seasonal dip that is seen in the vegetables index in December every year. ICRA expects the CPI deflation in the food and beverage segment to narrow further in December 2025.
“A continued base-normalisation and the hardening in prices of some vegetables could make the headline CPI inflation cross 1.5% in the next print, which will be the last before the next MPC (in February),” ICRA’s chief economist Aditi Nayar said.
RBI has forecast October-December inflation at 0.6 % and January-March at 2.9%. The movement of inflation is on expected lines and would tend to move upwards in January-March.
With GDP growth rates expected to moderate in October-December and January-March, this can be a reason for another rate cut by the RBI in February, chief economist at Bank of Baroda Madan Sabnavis said.
Urban retail inflation came in at 1.4% in November and rural category at 0.1%.