India’s Inflation rate—headline and core excluding precious metals are projected to remain higher in FY27 than in FY26, revealed the Economic Survey 2025-26 tabled in the Parliament on January 29, adding that it is unlikely to be a concern.
"The trajectory of core inflation will need to be closely monitored in the context of monetary policy easing and potential upward pressures from global base metal prices,” stated the survey underscoring that new CPI series having implications for assessing inflation and called for cautious interpretation of price dynamics.
1 January 2026
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According to reports, the CPI series will shift to a new 2024 base starting with the January print — due on February 12, with an updated consumption basket that includes more items and assigns a higher weight to non-food components. This is expected to help contain volatility related to food.
In December 2025, the Reserve Bank of India had revised its inflation projection for FY26 downwards to 2% from 2.6%. It also revised the forecast upwards by 50 bps to 7.3%.
Inflation trends in India have eased significantly in recent months, hitting a three-month high of 1.3% in December 2025, rising from 0.7% in November, as food deflation eased and price pressures strengthened in miscellaneous items.
In December 2025, talking about the upcoming trends, Dipti Deshpande, Principal Economist at Crisil told PTI that the uptick was driven by food, where deflation narrowed as the high base effect gradually waned.
"Going ahead, CPI inflation is likely to inch up as the base effect for food fades further. We expect CPI inflation to rise to 5% in fiscal 2027, from an estimated 2.5% in the current fiscal as food inflation normalises," Deshpande told PTI.
Meanwhile, food prices remained in deflation for the seventh consecutive month with the December reading at -2.71%.
GST Rate Cuts Provide Relief
Lower prices are already a result of the rationalisation of the GST rate. Between September and December, prices for consumer electronics and cars dropped significantly, indicating a far stronger pass-through than in previous years.
According to reports, average prices in these categories declined 3.6% over the September-December period. This contrasts with the same months in 2024 and 2023, when prices barely moved, falling by just 0.3% on average.
