India’s headline inflation rate YoY for November 2025 registered at 0.25%, a significant decline from October’s 1.54% and well below the consensus estimate of 0.48%, according to the Sigmanomics database. This is the lowest inflation print since January 2024, when inflation was 0.20%. The sharp deceleration reflects easing food and energy prices, alongside muted demand pressures amid a cautious global economic environment.

Drivers this month

• Food inflation slowed, contributing -0.12 percentage points (pp) to the headline drop.
• Energy prices declined by 3.50% MoM, reducing inflation by -0.08 pp.
• Core inflation components (excluding food and energy) remained stable at 4.10% YoY, indicating underlying price pressures.

Policy pulse

The current inflation rate sits well below the Reserve Bank of India’s (RBI) 4% target band, signaling ample room for accommodative monetary policy. The RBI’s repo rate has remained steady at 6.50% since September 2025, with market expectations now tilting towards a pause or potential cut in early 2026 if disinflation persists.

Market lens

Immediate reaction: The Indian rupee (INR) strengthened modestly by 0.30% against the USD within the first hour post-release, reflecting improved real yield prospects. Sovereign bond yields on the 10-year paper declined by 5 basis points, while equity indices showed mixed reactions amid cautious optimism.

Inflation is a core macroeconomic indicator that influences consumption, investment, and policy decisions. India’s 0.25% YoY inflation contrasts sharply with the 5.22% peak recorded in January 2025, illustrating a rapid disinflationary trend over the past 10 months. The 12-month average inflation now stands at approximately 2.90%, down from 4.10% in mid-2025.

Monetary policy & financial conditions

The RBI’s monetary stance remains cautiously accommodative. Lower inflation reduces pressure on the central bank to hike rates, potentially enabling support for growth. However, subdued inflation also raises concerns about demand weakness, which could delay credit expansion and dampen financial market sentiment.

Fiscal policy & government budget

India’s fiscal deficit target for FY2025-26 remains at 5.90% of GDP. Lower inflation can ease the government’s debt servicing costs but may also constrain nominal revenue growth, complicating budgetary balance. The government’s stimulus measures, including infrastructure spending and rural support, aim to offset demand headwinds.

External shocks & geopolitical risks

Global energy price volatility and geopolitical tensions in key supply regions remain key risks. A sudden spike in crude oil prices could reverse the disinflation trend. Additionally, currency fluctuations driven by US monetary policy or geopolitical events could impact import costs and inflation dynamics.

Drivers this month

• Food price index YoY fell from 3.20% to 1.10%, reflecting good monsoon harvests and supply chain normalization.
• Energy inflation dropped from 2.50% to -1.00%, led by lower global crude prices and domestic fuel subsidies.
• Core inflation steady at 4.10%, indicating persistent wage and service sector price pressures.

Policy pulse

The RBI’s inflation target of 4% remains comfortably above the current print, providing room for potential rate cuts if growth concerns intensify. However, sticky core inflation and external risks may temper aggressive easing.

Market lens

Immediate reaction: The INR/USD pair appreciated by 0.30%, while 2-year government bond yields declined by 7 basis points, reflecting market relief on inflation risks. Equity markets showed cautious gains, with the Nifty 50 index up 0.40% in early trading.

Looking ahead, India’s inflation trajectory will depend on several factors, including global commodity prices, domestic demand recovery, and policy responses. We outline three scenarios with associated probabilities:

Bullish scenario (30% probability)

• Global energy prices remain stable or decline further.
• Domestic demand picks up moderately, supporting growth without inflation spikes.
• RBI maintains accommodative policy, spurring investment and consumption.
• Inflation stabilizes around 3% YoY by mid-2026.

Base scenario (50% probability)

• Commodity prices fluctuate but remain contained.
• Core inflation remains sticky near 4%, limiting aggressive rate cuts.
• Fiscal stimulus offsets demand softness but with limited inflation impact.
• Inflation averages 2.50–3.50% YoY through 2026.

Bearish scenario (20% probability)

• Energy prices spike due to geopolitical tensions.
• Currency depreciation raises import costs.
• Demand-driven inflationary pressures resurface.
• Inflation rebounds above 5%, forcing RBI to tighten policy.

Monitoring global oil markets, currency stability, and domestic wage growth will be critical to refining these outlooks. The Sigmanomics database methodology relies on official CPI data, adjusted for seasonal and base effects, ensuring robust inflation tracking.

India’s November 2025 inflation print of 0.25% YoY signals a marked easing of price pressures, offering breathing room for policymakers and consumers alike. However, persistent core inflation and external uncertainties counsel caution. The RBI’s next moves will likely balance growth support with vigilance on inflation risks. Fiscal policy remains a key lever to sustain demand without overheating the economy. Market participants should watch for shifts in commodity prices and currency trends as leading indicators of inflation dynamics.

In sum, India’s inflation environment is at a crossroads: disinflationary forces dominate headline readings, but underlying pressures and external risks require careful navigation. This nuanced landscape demands agile policy and market strategies in the months ahead.

Key Markets Likely to React to Inflation Rate YoY

India’s inflation data significantly influences several financial markets, from currency pairs to equities and bonds. The following five tradable symbols historically track inflation trends closely, reflecting their sensitivity to price changes and monetary policy shifts:

• USINR – The USD/INR currency pair reacts strongly to inflation surprises, impacting import costs and capital flows.
• NIFTY50 – India’s benchmark equity index, sensitive to inflation-driven monetary policy and corporate earnings.
• RELIANCE – A major conglomerate with exposure to energy and consumer sectors, impacted by inflation and input costs.
• BTCUSD – Bitcoin often acts as an inflation hedge, with price movements influenced by inflation expectations globally.
• EURINR – The Euro/INR pair reflects broader currency market sentiment and inflation differentials between Europe and India.

FAQs

What is the current inflation rate YoY for India?

The latest inflation rate YoY for India is 0.25% as of November 2025, the lowest in nearly two years.

How does India’s inflation impact monetary policy?

Lower inflation provides the Reserve Bank of India room to maintain or cut interest rates, supporting growth while monitoring core inflation risks.

Why is core inflation important alongside headline inflation?

Core inflation excludes volatile food and energy prices, reflecting underlying price pressures that influence long-term policy decisions.

Takeaway: India’s sharp disinflation in November 2025 opens policy space but demands vigilance on core inflation and external risks. Markets will closely watch upcoming data for signs of sustained price stability or renewed pressures.

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