India’s inflation rate increases to 0.71% in November, but the Rupee continues to bleed

KEY POINTS:India’s inflation rate Y/Y increased to 0.71% vs 0.70% expected in NovemberThe prior release saw inflation falling to a record low of 0.25%The RBI’s inflation target is 4% with a +/-2% tolerance bandInflation remains far below the central bank’s targetINFLATION REPORT:India’s inflation rate increased to 0.71% in November after falling to 0.25% in October. The Ministry of Statistics and Programme Implementation noted that the increase in headline inflation and food inflation during the month of
November was mainly attributed to increase in inflation of Vegetables,
Egg, Meat and fish, Spices and Fuel and light.Food makes up the largest share of India’s Consumer Price Index (CPI) basket (typically around 46%). This means that swings in food inflation influence significantly overall inflation. A government review might lower slightly the weight in the upcoming revision in January 2026.MARKET REACTION:The INR strengthened