November Retail Inflation Rises to 0.71% But Still Below RBI’s Tolerance Band

India’s retail inflation rose to 0.71% in November after hitting a record low of 0.25% in October, reflecting a partial reversal of the sharp disinflation brought on by GST rate cuts and a favourable base. The uptick was expected as food and fuel categories registered firmer prices, although the overall inflation profile remains significantly below the Reserve Bank’s 4% target.

Data released by the National Statistics Office showed food inflation at -3.91% in November, compared with -5.02% in October. The month-on-month shift was driven by higher prices of vegetables, eggs, meat and fish, spices, and fuel and light. Despite this rise, food inflation stayed in deflation for the fifth consecutive month, indicating that supply-side pressures remain contained in most categories. Rural food inflation stood at -4.05%, while urban food inflation came in at -3.60%.

Rural headline inflation increased to 0.10% in November from -0.25% in October, reflecting higher costs in perishables and energy, while urban inflation rose more sharply to 1.40% from 0.88%. The divergence suggests stronger pass-through in urban centres from fuel and some protein items, while rural areas continue to benefit from steady supplies of cereals and vegetables.

CPI inflation has now stayed below the RBI’s 4% medium-term target for 10 consecutive months. It has also been below RBI broader range of 2-6% for four months. Earlier in the month, the Reserve Bank sharply lowered its inflation projection for 2025–26 to 2.0% from 2.6%, indicating confidence in the evolving price environment. The November print is consistent with this shift, as the headline rate remains anchored well below the medium-term target despite the modest rise.

Food prices will remain the key determinant of near-term inflation dynamics. The November increase largely reflects base effects rather than a broad tightening in supply conditions. Price trajectories in vegetables, spices, and fuel categories will require monitoring, but no evidence yet points to a sustained or broad-based price rise.

For monetary policy, the latest reading does not materially alter the broader easing narrative forming since early this year.