Last in the series: Retail inflation up 1.33% in December

Retail inflation rose to 1.33% in December, up slightly from 0.71% in November, as a benign base effect and low food prices kept the headline number in check.

December’s CPI inflation data comes just ahead of the Union Budget 2026-27 on February 1 and the meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India from February 4 to 6.

While CPI inflation data will be crucial for each of these two major policy events, it will also be the last data set in the current CPI series. From February, a new CPI series with a base year of 2024 will be launched with an updated item basket and methodology which will provide the retail inflation estimates for January 2026.  

“This is the last release of CPI for base 2012=100. The revised CPI series on base 2024=100 will be released on 12th February, 2026 (Thursday) or the next working day in case of 12th being a holiday,” said the release by the Ministry of Statistics and Programme Implementation on Monday.

This will be the first revision in the CPI in a decade. The current series with a base year of 2012 was released in January 2015. The new series would mark a significant milestone in India’s data updation exercise. Later in the month on February 27, the new GDP series with a base year of 2022-23 for the second advance estimates of GDP for FY27 will also be released. In May 2026, an updated series for the index of industrial production would also be released.

Analysts expect retail inflation to rise in coming months and are also factoring in another 25 basis point rate cut by the MPC in the next few months but remain on the fence about the timing noting that the new series of CPI and GDP will shed more light on the macroeconomic scenario.

“While the December 2025 MPC minutes suggest a possibility of another rate cut in February 2026, ICRA believes that a pause is warranted at the current juncture. Besides, it would be prudent to wait and assess the updated CPI (base: 2024) and GDP (base: 2022-23) series, which are due to be released later in February, as these will determine the current growth-inflation mix and aid in forming a fresh outlook," said Aditi Nayar, Chief Economist and Head, Research & Outreach, ICRA.

Paras Jasrai, Associate Director, India Ratings and Research noted that retail inflation in December 2025 was at a three-month high and the marginal uptick was largely on account of decline in the food deflation. The food deflation declined to 2.7% in December 2025 from 3.9% in the previous month. The agency expects the next month’s final policy for FY26 to opt for a 25 basis point cut in policy rates which may be the last easing in the current cycle by the MPC.