India has recorded its lowest headline inflation since the beginning of the Consumer Price Index (CPI) series, with average inflation at 1.7 per cent during April–December 2025, even as the economy posted robust growth of 8 per cent, according to the Economic Survey 2025–26 tabled in Parliament on Thursday.
The survey attributed the sharp moderation in retail inflation largely to easing prices of food and fuel, which together constitute 52.7 per cent of the CPI basket. A broad disinflationary trend in these components helped contain price pressures despite global uncertainties.
Data presented in the survey showed that average CPI inflation has followed a steady downward path over the past four years, declining from 6.7 per cent in 2022–23. Food inflation played a central role in this trend, supported by favourable weather conditions and higher agricultural output that improved supply conditions.
Core inflation, which excludes food and fuel, remained relatively stable over the same period, though it showed a modest increase. The survey noted that this rise was primarily driven by sharp increases in prices of precious metals such as gold and silver, which reached lifetime highs amid heightened global uncertainty and strong safe-haven demand. Excluding precious metals, core inflation followed a declining trajectory similar to headline inflation.
The survey highlighted that inflation has eased over the past two years in sectors including clothing and footwear, housing, and health, while transport and communication saw fluctuations. These trends were attributed to lower input costs, improved supply chains, and increased competition in goods markets where prices adjust more frequently.
Among major Emerging Markets and Developing Economies, India recorded one of the steepest declines in headline inflation in 2025, amounting to approximately 1.8 percentage points. This disinflation occurred alongside GDP growth of 8 per cent in the first half of FY 2026, underscoring the economy’s ability to sustain growth while managing price stability.
Global rating agencies have also acknowledged India’s inflation management framework. The survey cited S&P, which noted that the shift to inflation targeting has helped anchor inflation expectations more effectively compared to a decade ago.
Between 2008 and 2014, India experienced multiple episodes of double-digit inflation. In contrast, CPI inflation averaged 5.5 per cent over the past three years, despite volatility in global energy prices and supply-side disruptions. In recent months, inflation remained near the lower bound of the Reserve Bank of India’s target range of 2–6 per cent.
The survey also placed India’s performance in a global context, noting that inflation has moderated worldwide. Global headline inflation declined from a peak of 8.7 per cent in 2022 to 4.2 per cent in 2025, reflecting a broad-based easing across advanced and emerging economies.
The Economic Survey concluded that stable prices, credible monetary policy, and a deep domestic capital market have created a supportive macroeconomic environment for sustained growth.
