Food Gets Cheaper, But India's Cost Of Living Still High In December

For Indian households, December's inflation data delivers a story of mixed relief. Even as headline retail inflation inched up to 1.33% from 0.71% in November, food prices continued to remain in deflation for a seventh consecutive month.

Many basic items are now cheaper than they were a year ago. However, the overall cost of living keeps rising in other ways, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on January 12.

Throughout 2025, inflation steadily cooled, falling from 5.97% in January to 1.33% in December, a trajectory driven largely by the sustained downturn in food inflation. By mid-year, food prices had slipped into negative territory and stayed there, pulling down the headline rate.

Yet for most families, this easing has not fully translated into lighter monthly expenses. While the food basket shows visible deflation, the prices of services, lifestyle goods, and non-food essentials remain firm, offsetting the benefits of cheaper vegetables or pulses.

Inside the food basket, the contrast is striking. Vegetable prices were 18.47% lower than a year ago and pulses were down 15.09%, offering some respite on daily market trips. But many staples tied to regular diets became more expensive. Meat and fish prices rose 5.12%, eggs 4.76%, and milk and milk products 2.56%. Edible oils climbed 6.75%, and fruits were up 6.66%. This uneven pattern explains why households do not always feel the comfort of "negative food inflation", even when the aggregate number suggests relief.

Beyond the kitchen, living costs continued to climb year-on-year. Precious metals saw the steepest surge: silver prices soared 97.07% and gold rose 68.66%, putting additional pressure on savings and household investment decisions.

Everyday expenditure categories also remained elevated. Personal care and effects increased 28.07%, while essential services, such as health (3.43%) and education (3.32%), became more expensive than the overall inflation rate.

Housing inflation stood at 2.86%, reinforcing the broader picture: even in a low-inflation environment, the cost of day-to-day living continues to edge up. Cheaper food alone cannot offset rising prices in services, healthcare, education, personal consumption, and long-term savings-categories that form a growing share of urban household budgets.