India’s inflation rises from record low but stays far below RBI target

India’s retail inflation edged up in November from a record low a month earlier, but stayed far below the Reserve Bank of India’s (RBI’s) 4% target as falling food prices continued to offset firmer costs elsewhere.

Consumer prices rose 0.71% from a year ago, government data released on Friday showed, up from 0.25% in October.

The move higher was driven less by a fresh price surge than by a smaller drag from food. The Consumer Food Price Index was still in deflation at -3.91%, compared with -5.02% in October, as the pace of declines in categories such as vegetables cooled.

The breakdown underscored a widening split between rural and urban trends. Rural headline inflation rose to 0.10% from -0.25% in October, while urban inflation quickened to 1.40% from 0.88%, the data showed.

Official data flagged higher inflation in vegetables, egg, meat and fish, spices, and fuel and light as key contributors to the step-up in the headline print.

Fuel and light inflation rose to 2.32% from 1.98% in October, while housing inflation held near 3%.

For policymakers, the print keeps the near-term picture unusually benign. Inflation has now been below the RBI’s 2%–6% tolerance band for a third straight month, bolstering expectations that the central bank has scope to keep easing if growth softens after the festive-season boost.

The RBI cut its policy rate by 25 basis points earlier this month and projected inflation at 2% for FY26, with 0.6% in the October-December quarter and 2.9% in January-March, as it warned that base effects could lift readings into early 2026. One basis point is one-hundredth of a percentage point.

Economists also expect the data to be watched through the lens of measurement changes ahead. A revised CPI inflation series is due in February, potentially reshaping weights to reflect shifts such as rising online consumption.