Consumer Price Index for December 2025

One line

The provisional all-India Consumer Price Index recorded 1.33% year-on-year headline inflation in December 2025, while food inflation based on the CFPI was -2.71%.

Summary

The release is useful because headline and food inflation moved differently. Headline CPI includes the wider consumption basket, while the Consumer Food Price Index (CFPI) isolates food. A negative food inflation rate means the food index was lower than a year earlier, not that every food item became cheaper.

The December data also showed rural headline inflation of 0.76% and urban headline inflation of 2.03%. These figures are provisional and may be revised.

PYQ pattern

UPSC commonly tests the difference between CPI and WPI, headline and core inflation, and year-on-year and month-on-month measures. Use the official UPSC archive to practise interpreting data rather than memorising a single number.

Core notes

CPI measures changes in retail prices faced by households over time.
Year-on-year inflation compares a month with the same month of the previous year. It is not the same as month-on-month change.
CPI is compiled for rural, urban, and combined sectors. Housing inflation is compiled only for the urban sector.
The Monetary Policy Committee uses CPI inflation as the inflation target measure under India's flexible inflation-targeting framework.

Prelims lens

CFPI is a food-price index derived from the CPI basket.
A basis point is one-hundredth of a percentage point. A 62-basis-point rise equals 0.62 percentage points.
Provisional estimates can change with later data and revisions.

MCQ 1

Consider the following statements:

CFPI is intended to capture food-price changes.
A negative year-on-year food inflation rate means every food item became cheaper during the month.

A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Reveal answer

A

CFPI measures food-price movement. An aggregate negative rate does not imply that each item or every household faced a price decline.

MCQ 2

Which of the following is correct about the December 2025 CPI release?

A. It reported only wholesale prices.
B. The headline inflation figure was a provisional year-on-year estimate.
C. It excluded rural and urban classification.
D. Housing inflation was compiled for rural areas only.

Reveal answer

B

PIB reported provisional year-on-year CPI inflation. The release included rural, urban, and combined figures, and housing inflation is compiled only for the urban sector.

Mains

Question, 10 marks, 150 words: Why should policymakers read headline CPI, food inflation, and rural-urban inflation together?

Approach:

Define CPI, CFPI, headline inflation, and the comparison period.
Explain food's weight and the different exposure of rural and urban households.
Discuss supply shocks, base effects, transmission, and the limits of aggregate data.
Recommend coordinated monetary, food-supply, storage, and income-support responses.