India’s retail inflation rose to a three-month high of 1.33% in December and could further inch up, but it is widely expected that it would stay well within 4% in the remaining months of the current fiscal.

The Reserve Bank of India’s (RBI) inflation target is at 4%, with a 2% tolerance on either side of the range.

Inflation rose from 0.71% in November, mainly due to rise in food prices. The previous high was 1.44% in September.

"We believe the bottom for inflation is now behind us and inflation could continue to edge up over the coming months, although still expected to remain well below 4% till mid-2026," said Sakshi Gupta, principal economist at HDFC Bank.

The food inflation, based on Consumer Price Index (CPI), remained negative for the seventh consecutive month at (-) 2.71%, though up from (-) 3.91% in November.

“The increase in headline inflation and food inflation during the month of December, 2025 is mainly attributed to increase in inflation of personal care and effects, vegetables, meat and fish, egg, spices and pulses and products," National Statistics Office (NSO) said while releasing the CPI data.

Inflation remained below the RBI's lower tolerance limit for the fourth straight month in December.

"The increase in headline inflation and food inflation during the month of December, 2025 is mainly attributed to increase in inflation of personal care and effects, vegetables, meat and fish, egg, spices and pulses and products," National Statistics Office (NSO) said while releasing the CPI data.