India's Inflation Surprise: 1.33% in December – Still Ultra-Low, Rate-Cut Door Wide Open

India's inflation rate for December 2025 went up to 1.33% compared to last year. That's the highest it's been in three months, and it's up from 0.71% in November. Still, it's a little lower than what Reuters predicted (around 1.5%). This increase happened because of how low inflation was a year ago, plus some prices went up for things other than food. Food prices, though, are still falling – this is the seventh month in a row.

Some things that cost more were produce, meat and fish, eggs, spices, beans, and toiletries. Luckily, food prices dropping (down 2.71%) helped balance things out. Inflation in the countryside was 0.76%, and in cities, it was 2.03%. For the last three months of 2025, the average was about 0.77–0.8%. That's a bit higher than what the Reserve Bank of India thought it would be (0.6%), but overall inflation is still under the bank's 4% target. It's been below that target for 11 months straight.

It looks like the Reserve Bank of India will probably keep things easy with interest rates. Inflation in 2025 was the lowest it's been in 12 years (around 2.2%), so people think they might cut rates again in February 2026. This is the last report using the old way of calculating things. Starting in January, they'll use a new method with 2024 as the base year and updated numbers. The next report comes out in February, and inflation might look a little higher with the new system.