The latest Consumer Price Index (CPI) print for India, released on November 12, 2025, reveals a significant deceleration in inflationary pressures. The month-on-month CPI growth slowed to 0.25%, sharply below the consensus forecast of 0.48% and down from 1.44% in October. This marks the lowest monthly inflation rate since December 2024, underscoring a notable easing in consumer price pressures across the country.

Drivers this month

• Food inflation moderated sharply, contributing approximately 0.10 percentage points (pp) to the CPI increase, down from 0.35 pp last month.
• Energy prices remained stable, with fuel inflation near zero, reflecting global oil price stability.
• Core inflation components, excluding food and energy, held steady at around 0.15%, indicating persistent but contained underlying price pressures.

Policy pulse

The November CPI reading sits well below the Reserve Bank of India’s (RBI) 4% inflation target, suggesting that monetary policy could remain accommodative in the near term. The RBI’s recent rate pause appears justified given the subdued inflation print, though vigilance remains warranted amid global uncertainties.

Market lens

Immediate reaction: The Indian rupee (INR) appreciated modestly by 0.30% against the US dollar within the first hour of the release, while 2-year government bond yields declined by 5 basis points, reflecting market relief over easing inflation risks.

India’s CPI inflation has trended downward over the past year, with the November 2025 figure of 0.25% representing a marked slowdown from the 4.31% recorded in February 2025. The 12-month average inflation rate now stands near 2.50%, well below the RBI’s comfort zone. This decline is consistent with broader macroeconomic indicators showing moderate GDP growth of 5.80% in Q3 2025 and stable unemployment rates around 7.10%.

Monetary policy & financial conditions

The RBI has maintained its policy repo rate at 6.50% since September 2025, balancing growth support with inflation control. Financial conditions remain accommodative, with credit growth steady at 12% year-on-year and liquidity ample. The subdued CPI print may prompt the RBI to consider further rate cuts if inflation remains anchored.

Fiscal policy & government budget

India’s fiscal deficit for FY2025 stands at 5.90% of GDP, slightly above the government’s target of 5.50%. The government continues to prioritize infrastructure spending and social welfare programs, which support demand but also pose inflation risks. Fiscal prudence will be critical to sustaining macro stability amid global uncertainties.

Drivers this month

• Food inflation contribution: 0.10 pp (down from 0.35 pp in October)
• Energy inflation contribution: ~0.00 pp (stable)
• Core inflation contribution: 0.15 pp (steady)

Market lens

Immediate reaction: INR/USD strengthened by 0.30%, while 2-year government bond yields fell by 5 basis points, reflecting market optimism about inflation containment and potential RBI easing.

Looking ahead, India’s inflation trajectory faces a mix of upside and downside risks. The base case scenario (60% probability) assumes inflation will stabilize around 3% YoY in early 2026, supported by moderate demand growth and stable commodity prices. This would allow the RBI to maintain current rates or consider modest easing.

Bullish scenario (20% probability)

Inflation remains subdued below 2%, driven by continued supply-side improvements and weak demand. This could prompt the RBI to cut rates by 25-50 basis points, boosting growth prospects.

Bearish scenario (20% probability)

Geopolitical tensions or supply disruptions push inflation above 5%, forcing the RBI to tighten policy. Fiscal slippage or currency depreciation could exacerbate inflationary pressures.

External shocks & geopolitical risks

Global commodity price volatility, particularly oil, remains a key risk. Rising geopolitical tensions in Asia could disrupt supply chains, impacting inflation. Conversely, easing tensions and stable crude prices would support the benign inflation outlook.

India’s November 2025 CPI print underscores a significant easing in inflationary pressures, providing the RBI with room to maintain or ease monetary policy. However, vigilance is warranted given external risks and fiscal dynamics. Financial markets have responded positively, with the INR strengthening and bond yields declining modestly. Structural trends such as urbanization, digitization, and evolving consumption patterns will continue to shape India’s inflation profile over the medium term.

Structural & long-run trends

India’s inflation has moderated partly due to improved agricultural productivity and supply chain efficiencies. Urbanization and rising incomes are shifting consumption baskets, potentially increasing demand for services, which may exert upward pressure on core inflation in the long run. Continued investment in infrastructure and technology will be critical to managing these dynamics.

Key Markets Likely to React to CPI

The CPI release is a critical indicator for markets tracking India’s economic health. Currency traders, bond investors, and equity markets closely monitor inflation data to gauge monetary policy direction and growth prospects. The following symbols historically correlate with CPI movements and are likely to react to this print:

• USINR – The USD/INR currency pair typically reacts to inflation surprises, reflecting shifts in monetary policy expectations.
• NSEI – India’s benchmark equity index often responds to inflation data through sector rotation and risk sentiment.
• RELIANCE.NS – A major conglomerate sensitive to domestic demand and input cost changes linked to inflation.
• BTCUSD – Bitcoin’s price can reflect inflation hedging demand, especially amid currency fluctuations.
• EURINR – The Euro/INR pair also reacts to inflation-driven capital flows and risk sentiment.

Indicator vs. USINR Since 2020

Mini-chart insight: Since 2020, spikes in India’s CPI inflation have often coincided with USD/INR depreciation, reflecting RBI rate hikes and currency volatility. The recent decline in CPI correlates with a modest INR appreciation, underscoring the currency’s sensitivity to inflation trends. This relationship highlights the importance of inflation data for forex market participants and policymakers alike.

FAQ

What does the latest India CPI reading indicate?

The November 2025 CPI reading of 0.25% indicates a sharp slowdown in inflation, suggesting easing price pressures and potential monetary policy accommodation.

How does this CPI print affect RBI’s policy stance?

With inflation below the 4% target, the RBI may maintain or consider easing rates, balancing growth support with inflation control.

Why is CPI important for financial markets?

CPI data influences expectations for interest rates, currency valuation, and equity market performance, making it a key macroeconomic indicator.

Final takeaway: India’s November CPI print signals a clear easing in inflation, providing the RBI with flexibility but requiring close monitoring of external risks and fiscal discipline to sustain macro stability.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/13/25