Once again, relief news has emerged on the inflation front in India. According to data released by the government on Wednesday, India's wholesale price inflation (WPI) increased to 0.83% in December. Earlier in November it was 0.32% less. The government said that the main reason for positive inflation in December 2025 was the increase in prices of other manufacturing products, minerals, construction of machinery and equipment, food products and textiles.
Food inflation remained stable at 0.00% in December. A decline of 2.60% was recorded in November. However, in a survey of economists conducted by Reuters, wholesale inflation was estimated to be 0.30% in December. Earlier, retail inflation increased to 1.3% in December 2025, which was 0.7% in November. This increase was due to less decline in food items and increased pressure in the prices of other goods. However, despite this, this was the fourth consecutive month in the current financial year when inflation remained below the Reserve Bank's target of 4%.
Inflation of primary commodities was -2.93% in November, which increased to 0.21% in December. At the same time, fuel and electricity inflation remained negative in December too and stood at -2.31%, which is close to -2.27% in November. Inflation of manufactured goods increased to 1.82% in December, which was 1.33% in November. In the month of December, Wholesale Price Index (WPI) recorded an increase of 0.71% on month-on-month basis.
Earlier, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) had said that the central bank now expects average inflation to be 2.0% in the current financial year. This is much less than its earlier estimate of 2.6%. RBI has gradually reduced inflation estimates throughout the financial year, while increasing growth rate estimates. The inflation estimate for FY26 in February was 4.2%, which was reduced to 2.6% in October.
MPC has also released new inflation estimates on quarterly basis. According to this, inflation is estimated to be 0.6% in the third quarter of FY27, 2.9% in the fourth quarter, 3.9% in the first quarter and 4.0% in the second quarter. These estimates were higher than this in the October policy. This decision has come at a time when MPC reduced the policy repo rate by 25 basis points to 5.25% and maintained its neutral stance. RBI called it a balanced step to support growth and maintain control on inflation.
The Reserve Bank of India described the Indian economy as being in a special period of rapid growth and low inflation. This estimate is above RBI's recent estimate of 7.3% and better than last year's growth of 6.5%. Nominal GDP, which includes inflation, is expected to grow at 8% in the current financial year, down from 9.7% last year. These figures will be made the basis of the Union Budget to be presented on February 1. India's economic growth accelerated further in the second quarter of FY26. During this period, GDP growth was 8.2%, which is the highest level in the last six quarters. This was more than market expectations and better than the 7.8% growth in the April-June quarter. In the previous two financial years, the economy had grown at the rate of 6.5% and 9.2%.
