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India's "Goldilocks" Economy: Food Deflation Amid Rising CPI Sparks Hope

Food prices in India remained in deflationary territory during November. The overall consumer inflation figure ticked up slightly but stayed comfortably low. A bank report describes this mix of resilient growth and low inflation as a "Goldilocks" moment for the economy. However, analysts caution that risks remain if unseasonal weather disrupts food supplies.

Key Points: Food Inflation Stays Negative at -2.78% as CPI Rises to 0.71%

  • Food inflation stayed negative at -2.78% in November, rising from a record low in October
  • Overall Consumer Price Index (CPI) inflation printed at 0.71%, remaining below 1% for the second month
  • Core inflation eased slightly to 4.34%, while fuel inflation rose to 2.32%
  • The report warns of upside risks from unseasonal winter rains or supply disruptions
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Food inflation remained at negative 2.78% in November as CPI rose to 0.71%

Food prices remain in deflation at -2.78% in November, while overall CPI inflation edges up to 0.71%. Core inflation eases, creating a resilient growth environment.

"Hence, this is a 'Goldilocks' (sweet spot) moment for the Indian economy, with a combination of resilient growth and low inflation. - Union Bank of India Report"

New Delhi, December 14

Food prices stayed in deflation during November 2025 at negative 2.78 per cent, rising from the record low of negative 3.7 per cent in October, even as overall consumer inflation edged up. A report by the Union Bank of India showed that the broader price trend in the economy continued to remain soft.

The report said that the Consumer Price Index (CPI) for November printed 0.71 per cent, higher than 0.25 per cent in October but still below the 1 per cent mark for the second straight month. It notes that this number matched its earlier estimate. Core inflation eased slightly to 4.34 per cent from 4.41 per cent in October, while fuel inflation rose to 2.32 per cent from 1.98 per cent. CPI excluding vegetables fell to 2.86 per cent, compared with 2.99 per cent the previous month. The report adds that if the impact of the gold price jump is removed, CPI stands at negative 0.12 per cent, showing very soft price pressures.

"Hence, this is a "Goldilocks" (sweet spot) moment for the Indian economy, with a combination of resilient growth and low inflation," the report said. It highlights that the negative food inflation reading continues to be shaped by a high base of 8.2 per cent from November 2024.

The report explains that food prices increased month-on-month across many categories in November, except for cereals and sugar. Early signs from the Department of Consumer Affairs' on-the-ground data point to more firmness in food prices in December. As a result, vegetable inflation rose month-on-month to 2.55 per cent, compared with a negative 0.28 per cent in October. But due to a very high base of 29.4 per cent last year, year-on-year vegetable inflation stayed sharply at negative 22.2 per cent.

Pulses inflation increased month-on-month for the first time in 14 months, exactly as projected in the report. Still, on a year-on-year basis, pulses inflation remained at negative 15.86 per cent in November. Cereals inflation slipped to a fresh 50-month low of 0.10 per cent, down from 0.92 per cent in October. Fruits, sugar and non-alcoholic beverages saw monthly declines, while most other food items were flat or slightly higher.

Edible oil inflation, which had touched 21.24 per cent in August, continued to slow and fell to 7.8 per cent in November. The vegetables index moved up from 212 in October to 217 in November. CPI excluding vegetables softened further, again showing the strong impact vegetables have on the headline number.

The Union Bank of India report expects food inflation to stay mostly negative in the third quarter of FY26 because of the high base and normal winter cooling of prices. But it cautions that risks remain on the upside if unseasonal winter rains or supply disruptions occur.

- ANI

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Reader Comments

P
Priya S
Finally some good news for the household budget! 🎉 Negative food inflation for two months is a big relief after years of high prices. Hope this continues and the 'Goldilocks' moment translates to more money in our pockets.
R
Rohit P
Core inflation is still above 4% though. That's the real worry. Food prices go up and down with seasons, but the underlying price pressure in services and other goods hasn't come down enough. RBI should not get complacent.
S
Sarah B
Interesting analysis. The high base effect from last year is really skewing the numbers. Once that washes out, we might see a different picture. The caution about unseasonal rains is very valid - our farmers are already facing so many climate challenges.
V
Vikram M
Pulses inflation increasing month-on-month is the first sign of trouble. Daal is a staple in every Indian home. If pulses and edible oils start rising again, this 'sweet spot' won't last long. Government needs to manage buffer stocks proactively.
K
Karthik V
As a small business owner, low overall inflation is good for planning. But fuel inflation rising is a concern. Diesel prices affect everything from logistics to generator costs. Hope the global oil situation remains stable.

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