India inflation accelerates to 1.33% in December, driven by higher food prices

India’s consumer inflation rose to 1.33% in December accelerating from 0.71% in the prior month.

The headline inflation number was below economists’ expectations of a 1.5% increase in the consumer price index, according to a Reuters poll.

The Reserve Bank of India expects consumer inflation to be 2% for the fiscal year ending March 2026,downfrom a 2.6% forecast made in October. The central bank estimated inflation at 2.9% for the three months to March, rising to 4.0% for the quarter ending September 2026.

Record-low inflation in 2025 slowed nominal GDP growth, raising concerns among policymakers and investors.

India released an early estimate last week projecting real GDP growth of 7.4% for fiscal year 2026 and nominal GDP growth of 8.0%. This was sharply lower than the 10.1% nominal GDP growth forecast in the Union Budget for the same year.

“Nominal GDP growth rate slowdown is a cause of concern,” said Rana Gupta, managing director of Indian Equities at Manulife Investment Management. He added that earnings growth has decelerated to 9-10% in fiscal year 2026 from 12-13% earlier.

Gupta told CNBC’s “Inside India” on Thursday that he expected nominal GDP growth to pick up to 10-11% in fiscal year 2027 as inflation rose.