India’s retail inflation slips to 1.33% in December as food prices stay in deflation

India’s consumer price inflation fell to 1.33% in December, coming in lower than market expectations and reflecting the continued drag from falling food prices, according to official data released on Monday.

The print was below the CNBC-TV18 poll projection of 1.62%, offering relief on the headline front. However, prices did rise on a month-on-month basis, with inflation picking up to 0.71%, suggesting that underlying cost pressures are gradually building.

Food items remained the main factor behind the subdued inflation reading. Food inflation was in deflationary territory at –2.71% during the month, beating expectations and though the pace of decline was slightly less severe than in November, it continued to weigh heavily on overall inflation.

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Vegetable prices fell sharply, registering a contraction of 18.47%, while pulses remained deeply in deflation at 15.09%. Both categories showed some moderation compared with the previous month but continued to provide significant relief to household budgets.

Beyond food, however, price trends pointed to firmer conditions. Rural inflation rose to 0.76% from 0.10% a month earlier, while urban inflation climbed to 2.03% from 1.40%, indicating stronger price pressures in cities.

Fuel and light inflation eased marginally to 1.97%, while housing inflation softened to 2.86%. Clothing and footwear prices also showed a small decline in inflation, slipping to 1.44%.

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Overall, December’s data reflects a divergence in inflation dynamics, with falling food prices keeping headline inflation low even as non-food and urban components signal a gradual return of pricing pressure in the broader economy.