India's Inflation Rate Rises to 0.71% in November, Remains Below Target

India's consumer inflation rate increased to 0.71% in November 2025, up from a record low of 0.25% in October. This rise aligns with economists' expectations, as indicated by a Reuters poll predicting a 0.70% increase. The uptick in inflation is attributed to higher prices for vegetables, eggs, meat, fish, spices, and fuel, with fuel and light prices rising by 2.32% compared to 1.98% in October. Despite this increase, inflation remains significantly below the Reserve Bank of India's (RBI) target of 4%, marking the third consecutive month under this threshold.

India's inflation rises from record low, but economists see scope for another rate cutIndia's inflation rate increases to 0.71% in November, but the Rupee continues to bleedCNBCCityLabIndia’s retail inflation quickens to 0.71% in November from record low of 0.25% in OctoberIndia’s Inflation Remains Low Despite Food Price RiseIndia’s inflation rate inches up but remains well below target

In response to the low inflation environment, the RBI cut its policy interest rates by 25 basis points, bringing the rate to 5.25%. The central bank's monetary policy committee indicated a willingness to further ease rates if economic growth shows signs of slowing. The RBI projects inflation to average 2.9% in the three months leading to March 2026 and expects it to remain below the 4% target until at least September 2026.

CNBCCityLabIndia’s inflation rate inches up but remains well below targetIndia’s Inflation Remains Low Despite Food Price RiseIndia's inflation rises from record low, but economists see scope for another rate cutIndia’s retail inflation quickens to 0.71% in November from record low of 0.25% in OctoberIndia's November retail inflation rises to 0.71%

Economists suggest that the benign inflation conditions provide ample policy space for the RBI to consider additional rate cuts. Sakshi Gupta, an economist at HDFC Bank, noted that the current inflation trajectory could allow for another 25 basis point cut in February if growth momentum weakens post-festive season.

India's inflation rises from record low, but economists see scope for another rate cut

Food prices, which constitute nearly half of the consumer price index (CPI) basket, fell by 3.91% year-on-year in November, a slight improvement from a 5.02% decline in October. Vegetable prices specifically decreased by 22.2%, easing from a sharper 27.57% drop the previous month. Core inflation, which excludes volatile food and fuel prices, slightly declined to 4.34% from 4.41% in October.

India’s retail inflation quickens to 0.71% in November from record low of 0.25% in October

The RBI has revised its inflation forecast for the fiscal year ending March 2026 to 2.0%, down from an earlier estimate of 2.6%. This adjustment reflects a broader trend of decreasing inflation expectations, with the RBI's growth forecast for FY2025-26 also raised to 7.3% from 6.8%.

India’s retail inflation quickens to 0.71% in November from record low of 0.25% in October

Despite the positive outlook on inflation, some economists express caution regarding the potential impact of U.S. tariffs on Indian exports. The U.S. imposed a 25% tariff on Indian imports earlier this year, which could affect labor-intensive sectors and overall economic growth. As a result, exports to the U.S. fell by 8.5% in October, raising concerns about job losses and economic stability.

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Looking ahead, the RBI will receive the December inflation data before its February policy meeting, which will be crucial for assessing underlying inflation trends. While the current data suggests a stable inflation environment, economists anticipate a gradual increase in inflation rates as the base effect from last year's low figures diminishes. The RBI's upcoming review of its inflation mandate in March may also influence future policy decisions.

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• “The growth-inflation balance, especially the benign inflation outlook on both headline and core, continues to provide the policy space to support the growth momentum,” — Sanjay Malhotra, RBI Governor

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• “We believe weaker growth down the line, low for long inflation, and tight fiscal policy may require growth supportive monetary policy in 2026 as well,” — HSBC Research

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• “the rate cutting cycle is clearly nearing the end, followed by a prolonged pause” — Upasna Bhardwaj, Kotak Mahindra Bank

India’s inflation rate inches up but remains well below target

In summary, while India's inflation rate has increased, it remains well below the RBI's target, allowing for potential further monetary easing. However, external economic pressures, particularly from U.S. tariffs, pose risks to the growth outlook.

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