India November inflation bounces to 0.71% but still very dovish

17 Dec 2025 , 12:32 PM

NOVEMBER 2025 INFLATION STILL UNDER 1% 

After touching an all-time low of 0.25% in October 2025, the November 2025 inflation bounced to 0.71%. That is still well below the lower end of the RBI FIT range of 2%-6%. There has been a marginal rise in food prices in November, with most of the pressure coming from the urban segment rather than rural segment. Core inflation continues to remain elevated at 4.3%. 

Headline inflation and food inflation had peaked around October 2024 and has been a consistent downtrend since. That means; we could see waning impact of the base effect showing up in the form of higher inflation in coming months. Rabi promises to be good this year, but a lot will depend on the monsoons next year and the Kharif output, which will set inflation trajectory. 

With inflation at 0.25%, RBI went ahead and cut rates by 25 bps. That was partially on the strength of low inflation and partially to offset tepid nominal growth rate in Q2FY26 at 8.7%. However, the rate cut resulted in the rupee falling sharply beyond ₹90/$. Going ahead, the USDINR will be a key consideration in any rate shift decision. 

FOOD PRICES HARDEN; CORE FLAT; GOLD SIMMERS 

Food inflation was in negative for the sixth month in a row; even as headline inflation now averages just 0.80% in the last 3 months and 1.36% for last 6 months.  

Month	Food Inflation (%)	Core Inflation (%)	Headline Inflation (%)
Nov-24	9.04%	3.64%	5.48%
Dec-24	8.39%	3.58%	5.22%
Jan-25	6.02%	3.67%	4.26%
Feb-25	3.75%	3.95%	3.61%
Mar-25	2.69%	4.10%	3.34%
Apr-25	1.78%	4.07%	3.16%
May-25	0.99%	4.17%	2.82%
Jun-25	-1.01%	4.40%	2.10%
Jul-25	-1.76%	4.10%	1.61%
Aug-25	-0.69%	4.20%	2.07%
Sep-25	-2.28%	4.20%	1.44%
Oct-25	-5.02%	4.40%	0.25%
Nov-25	-3.91%	4.30%	0.71%

Data Source: MOSPI & Ministry of Finance Estimates 

The latest data on consumer inflation continues to show vast divergence from the averages. For instance, the food inflation in November is at -3.91%, against the last 12-month average of 1.83%. Headline inflation is now at 0.71%, compared to the last 12-month average of 4.04%. Latest core inflation is at 4.3% is above the 12-month average of 4.0%. 

NON-FOOD INFLATION: URBAN VERSUS RURAL  

Between October and November 2025, headline inflation bounced from 0.25% to 0.71%. During this period, headline rural inflation rose from -0.25% to 0.10%, while headline urban inflation bounced from 0.88% to 1.40%. What about food inflation between October and November 2025? It hardened from -5.02% to -3.91%. Rural food inflation also hardened from -4.85% to -4.05%, while urban food inflation bounced from -5.18% to -3.60%. There are signs of food inflation bottoming out. 

Non-Food  Basket	Non-Food  Weights	Rural Inflation	Urban Inflation	Headline Inflation
Clothing	6.32	1.55	2.06	1.79
Footwear	1.04	0.00	-0.17	-0.11
Clothing and footwear	7.36	1.36	1.76	1.49
Housing	–	–	2.95	2.95
Fuel and light	7.94	1.99	2.95	2.32
Household goods and services	3.75	1.56	2.53	2.03
Healthcare	6.83	3.61	3.61	3.60
Transport and communication	7.60	1.02	0.78	0.88
Recreation and amusement	1.37	1.16	1.36	1.29
Education	3.46	2.97	3.67	3.38
Personal care and effects	4.25	24.22	23.83	24.04
Miscellaneous	27.26	5.93	5.23	5.64

Data Source: MOSPI & Ministry of Finance Estimates 

In the non-food basket; urban inflation was higher in clothing, fuel & light, household goods, recreation, and education. Rural non-food inflation is higher for footwear, transport & communication, Personal Care Effects, and other items. Personal effects inflation looks inflated due to impact of gold and silver prices. The estimate is that if impact of gold was removed, the headline inflation would be closer to zero. 

FOOD BASKET: HOW RURAL AND URBAN INDIA STACKED UP? 

Food basket, with a weightage of 47.25%, is a major swing factor for CPI inflation.  

Food  Basket	Food  Weights	Rural Inflation	Urban Inflation	Headline Inflation
Cereals and products	12.35	-0.35	1.18	0.10
Meat and fish	4.38	1.95	3.44	2.50
Egg	0.49	4.11	3.27	3.77
Milk and products	7.72	2.14	3.09	2.45
Oils and fats	4.21	8.35	7.06	7.87
Fruits	2.88	7.87	5.73	6.87
Vegetables	7.46	-22.58	-21.62	-22.20
Pulses and products	2.95	-15.90	-15.72	-15.86
Sugar and Confectionery	1.70	4.20	3.75	4.02
Spices	3.11	-3.31	-2.05	-2.89
Non-alcoholic beverages	1.37	2.69	3.32	2.92
Prepared meals	5.56	3.49	3.89	3.65
Food Basket	47.25	-4.05	-3.60	-3.91

Data Source: MOSPI & Ministry of Finance Estimates 

How do rural and urban inflation compare on the food basket? Rural inflation is comparatively higher in case of eggs, oils & fats, fruits, and sugar & confectionary. On the other hand, urban inflation is higher in case of cereals, meat & fish, milk, vegetables, pulses, spices, non-alcoholic beverages, and prepared meals. 

COULD THIS BE THE END OF THE RATE CUT CYCLE? 

If one goes by the recent pike in bond yields, it looks like the end of the rate cut cycle. Inflation could gradually move up as the base effect wears out. Nominal growth will be addressed via fiscal measures. But the biggest concern for the RBI and the government will be the weak rupee.  After the sharp fall in the rupee after the rate cut in December; we can expect status quo on repo rates for now!