The year-on-year (YoY) CPI inflation expectedly inched up to 0.7% in November 2025 from an all-time low of 0.3% in October 2025, while printing below ICRA’s forecast of 1.0% for the month. The uptick largely stemmed from the food and beverage segment (F&B: to -2.8% from -3.7%), that saw a narrower deflation in November 2025 compared to the prior month. However, the core-CPI (CPI excluding F&B, fuel & light, and petrol and diesel for vehicles) inflation eased slightly to 4.4% from 4.5% in October, supported by GST rate rationalisation and limited sequential uptick in gold prices; excluding gold, the core CPI remained benign at just 2.6% in the month. ICRA expects the CPI inflation to cross 1.5% in December 2025 amid continued base normalisation and hardening in some vegetable prices. In our view, the evolving inflation-growth outlook, as well as the fiscal policy measures unveiled by the next Union Budget, will guide the MPC's next decision. Our base case suggests a pause in the MPC's February 2026 policy review.

EXHIBIT: CPI inflation rose to a lower-than-expected 0.7% in November 2025 from a record low 0.3% in October 2025; in contrast, core-CPI inflation eased slightly to 4.4% vs. 4.5% in October 2025

Source: NSO; CEIC; ICRA Research