Published: 30 January 2026PRS India / PIBEconomy
Economic Survey: Retail Inflation Falls to Historic Low of 1.7% in FY26 (Apr-Dec)
The Economic Survey 2025-26 highlights a sharp decline in retail inflation, with the Consumer Price Index (CPI) averaging just 1.7% during April-December 2025 — the lowest since the current CPI series (base 2012=100) began. This represents a significant drop from 4.6% in FY25.
The decline was primarily driven by lower food prices due to favorable monsoon conditions and increased agricultural production. Food and fuel together account for 52.7% of the CPI basket. India achieved a 1.8 percentage point decline in inflation compared to 2024, the sharpest reduction among major Emerging Market and Developing Economies (EMDEs).
For FY27, the Survey projects a gradual increase in inflation but expects it to remain within the RBI's target band of 4% (plus or minus 2%). The Reserve Bank of India initiated a calibrated monetary easing cycle in FY26, with repo rate cuts supporting both growth and price stability.
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Q: Discuss the historic decline of retail inflation to 1.7% during April-December FY26 as per the Economic Survey, identifying drivers and the implications for RBI's monetary stance.
Answer (50 words):
Economic Survey 2025-26 reports CPI inflation averaged 1.7% during April-December FY26, the lowest since the current 2012-base series, down from 4.6% in FY25. Favourable monsoon and food-price moderation drove India's 1.8 percentage-point decline, the sharpest among EMDEs. RBI initiated calibrated repo-rate cuts within its 4 +/-2% target band.
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Linked questionEasy
What was the average retail inflation (CPI) during April-December 2025, as reported by the Economic Survey 2025-26?
Explanation · Correct answer AAverage CPI inflation during April-December 2025 was 1.7% — the lowest since the current CPI series (base 2012=100) began. This was a sharp decline from 4.6% in FY25, driven by lower food prices.
Frequently asked questions
What is India's retail inflation for FY26 according to Economic Survey?
India's **CPI inflation averaged just 1.7% during April-December 2025** — the lowest since the current CPI series began — down from 4.6% in FY25.
What drove India's historic low inflation of 1.7% in FY26?
The **1.7% inflation** was primarily driven by **lower food prices** due to good agricultural harvests and effective supply-chain management of vegetables and cereals.
What is the significance of India's 1.7% CPI inflation?
**CPI inflation of 1.7%** is well below RBI's 4% target, giving the central bank room to cut rates to support growth — while protecting consumer purchasing power and reducing the cost of living.
What is the current CPI series base year?
India's **Consumer Price Index (CPI)** uses **2012 as the base year**. The 1.7% average in FY26 is the lowest since this series began.
How does low inflation benefit India's economic outlook?
**Low inflation of 1.7%** enhances **real wage growth, boosts consumption, enables rate cuts**, reduces input costs for industry, and strengthens India's fiscal position by reducing subsidy pressures.
