Remember when onions made people cry in the political sense, not just in the kitchen? Well, they’re back in the headlines. India’s consumer inflation rate, which dipped to a jaw-dropping 0.25% in October, bounced to 0.71% in November 2025. It’s still incredibly low by historical standards, but the sudden jump caught a lot of us off guard.
I’ve been tracking these numbers for years, and honestly, seeing inflation almost triple in a single month feels like watching a calm sea suddenly ripple. It’s not a storm yet, but the breeze definitely picked up.
What Actually Happened in November?
The short version: the great deflationary party in food and fuel started winding down.
For months, we enjoyed crashing vegetable prices, cheaper petrol and diesel, and a general sense that everything was miraculously getting cheaper. November reminded us that gravity still exists – prices stopped falling as fast, and in some cases, they turned around.
Food Inflation: The Usual Suspect Returns
Let’s be real – when Indians talk about inflation, we’re mostly talking about the grocery bill.
Food and beverages, which carry almost 46% weight in the CPI basket, saw their deflationary streak slow dramatically. Vegetables, that eternal drama queen of Indian inflation, went from deep negative territory to less negative. Translation: tomatoes and onions didn’t become expensive overnight, but they stopped getting cheaper every week.
Eggs, fish, meat, and spices also contributed. If you felt your non-veg thali got slightly pricier last month, you weren’t imagining it.
- Vegetables: deflation moderated sharply
- Eggs, meat & fish: turned positive
- Spices: steady upward pressure
- Cereals: still well-behaved (thankfully)
Fuel and Light: The Other Big Swing
Remember when LPG cylinder prices were actually coming down? That trend paused. Electricity tariffs in some states ticked up. Kerosene, though a smaller component now, also added to the basket.
In my experience, fuel is the one category that affects perception more than the actual number. When pump prices stop falling, people notice immediately.
Core Inflation – The Part RBI Watches Closely
Strip out food and fuel, and core inflation actually remains remarkably subdued – hovering somewhere around 3.5-4%, if historical patterns hold. That’s the part that tells you demand in the economy is still not running hot.
To me, this is perhaps the most interesting aspect of the November print: we have supply-side pressures pushing headline inflation up, but no real signs of overheating demand. It’s almost the opposite of what many emerging markets are experiencing right now.
When food and fuel drive the entire move, central banks tend to look through it – unless it starts affecting expectations.
– A former RBI deputy governor (paraphrased)
Why This Matters More Than the Headline Number
Let’s be clear: 0.71% is still the kind of inflation most central bankers dream about at night. Japan would kill for these numbers consistently. But the direction of change matters enormously in policy circles.
When inflation is falling, the RBI can afford to keep cutting rates or at least stay on hold with a dovish bias. When the slide reverses – even if from ultra-low levels – it forces policymakers to reassess.
I wouldn’t be surprised if the minutes of the next Monetary Policy Committee meeting have at least one member saying, “See, I told you the deflation risk was overblown.”
What Happens Next? Three Scenarios
- Base case (65% probability): Inflation drifts toward 2-3% over the winter as vegetable supplies improve again, rabi arrival keeps cereals cheap, and global oil stays range-bound. RBI stays on extended pause, maybe one final cut in early 2026.
- Upside risk (25%): Unseasonal rains damage winter crops, global energy shocks from Middle East tensions, rupee weakens – inflation crosses 4% by March. Rate cut cycle ends abruptly.
- Downside surprise (10%): Bumper harvests, oil collapses below $60, inflation falls back below 1%. RBI gets room for more aggressive easing.
Personally, I’m leaning toward the base case. Indian agriculture has a way of surprising on the upside when prices spike – farmers respond quickly.
The Household Impact: Not All Bad News
Yes, your vegetable vendor might quote slightly higher prices, but let’s zoom out.
Real wages – what your salary can actually buy – have been rising at the fastest pace in years because nominal wage growth (especially in rural India via MNREGA and farm incomes) has outpaced inflation dramatically. A 0.71% inflation rate still means your money buys almost the same as last year.
In fact, for fixed-income households and pensioners, this environment has been nothing short of golden. Savings rates are high, purchasing power is up. Perhaps the most under-reported story of 2025 has been the quiet wealth effect on lower-middle-class India.
| Category | Oct 2025 | Nov 2025 | Key Driver |
| Food & Beverages | -1.2% | +0.1% | Vegetables, proteins |
| Fuel & Light | -4.8% | -2.3% | LPG, electricity |
| Housing | +3.8% | +3.7% | Stable rents |
| Miscellaneous | +4.1% | +4.0% | Services steady |
| Headline CPI | 0.25% | 0.71% |
Global Context: India Is the Outlier (in a Good Way)
While the US is still battling 2.5-3% inflation, Europe is closer to 2%, and many emerging peers are above 5%, India’s November number would be cause for celebration almost anywhere else.
The combination of strong harvests, prudent fiscal policy, and a central bank that never lost credibility has created this sweet spot. It’s easy to forget how rare this is.
So should you worry about 0.71% inflation? Honestly, no.
Should you celebrate it either? Also no.
What it tells us is that the Indian economy is finally achieving something quite remarkable: price stability without sacrificing growth. After decades of either high inflation or growth sacrifices to tame it, we might – just might – have found the elusive middle path.
And if an occasional onion price spike is the price we pay for that balance, I’d say it’s a pretty decent deal.
