# Why does everything keep getting more expensive? > Inflation is normal, permanent, and uneven. This page uses 30 charts to explain what is happening to your money, why, and what you can actually do about it. **Why things keep getting pricier, in one chart** By December 2025, the purchasing power of ₹100 from 2012 had shrunk to just ₹51. Prices across India have risen over 92 times since 1960, but the annual inflation rate in December 2025 was only 1.3%, because food prices actually fell. Yet core inflation, which excludes food and fuel, was still 4.6%, and the ‘Miscellaneous’ category that includes health and education contributed the most to the headline number. This page unpacks how inflation works, why it hits different things at different speeds, and what it means for your savings, loans, and daily budget. Inflation is the gradual loss of a currency’s purchasing power. When you hear ‘inflation was 1.3% in December 2025’, that means a basket of goods and services that cost ₹100 a year ago now costs ₹101.30. That sounds small, but low, persistent inflation is like a slow leak in a tyre, over years it leaves you flat. India’s consumer price index (CPI) tracks what families actually pay. It is built from over 250 items, with weights based on how much households spend on each. The headline number hides wildly different stories beneath it. This page walks you through 30 charts that explain how inflation works, what it is doing right now, and why your budget feels the way it does. ## What ₹100 from 2012 buys today This is the most honest inflation chart. In January 2011, ₹100 could buy goods that, by the CPI basket, would have cost ₹112 in 2012 rupees. By December 2025, that same ₹100 could buy only ₹51 worth of 2012 goods. In 14 years, the rupee lost half its purchasing power. That is the power of compounding, even when annual inflation is modest, the erosion adds up. ## Prices are over 90 times their 1960 level The long view is even starker. A basket that cost ₹1 in 1960 cost ₹92.10 by 2025. That means a ₹100 note in 1960 would buy only ₹1 worth of goods today. Inflation over decades is not a bug of a growing economy, it is a feature. But this multiple reminds us that every generation starts from a higher price base. ## India’s inflation rate, 1960 to today The annual inflation rate has swung between a peak of 29% in 1974 and a low of -7.6% in 1976. In 2025 it was 2.2%. High inflation was the norm in the 1970s and early 1980s, but since the 1990s it has come down to a 5–8% range, and the recent 2.2% is unusually subdued. The chart shows that inflation is almost never zero, a modern economy almost always runs a small positive rate. ## Average inflation, decade by decade The 1960s saw average inflation of 5.9% per year. It peaked at 7.7% in the 1990s and is running at 5.2% in the 2020s so far. India has never had a decade of zero inflation. The cleanest long story is one of moderate, persistent inflation, with the 1970s and 1980s the worst decades. ## Inflation month by month since 2012 The monthly CPI inflation rate since January 2012 shows big swings. It started at 6.3% in January 2012, touched 12.2% in November 2013, and then moderated. In December 2025 it was 1.3%. The volatility comes mainly from food: a good monsoon or a supply disruption can push the headline up or down by 2–3 percentage points in a month. ## The sticky core: inflation without food and fuel If you strip out volatile food and fuel, you get core inflation. In December 2025, core inflation was 4.6%, while headline was 1.3%. Core is stickier because services like health and education don’t bounce around like vegetable prices. Since January 2012, core inflation has dropped from 10.4% to 4.6%, but it remains above headline, telling us that underlying price pressures are still alive. ## Shops vs mandis: retail (CPI) vs wholesale (WPI) The CPI measures what consumers pay; the wholesale price index (WPI) measures what producers and traders pay. In April 2026, WPI inflation was 8.3%, but CPI inflation in December 2025 was 1.3%. The two do not move in lockstep because they cover different baskets and stages of the supply chain. WPI is more sensitive to global commodity prices and the rupee, while CPI captures the street-level reality. ## Is India’s inflation high? A world comparison Compared with other large economies, India’s inflation is neither exceptionally high nor exceptionally low. In 2024, India’s CPI inflation was 5.0%, the US was 2.9%, China 0.2%, Brazil 4.4%, Indonesia 2.2%, Vietnam 3.6%, Bangladesh 10.5%, and South Africa 4.4%. India tends to run a higher inflation rate than most peers because of food price sensitivity and a large informal sector. ## The world’s worst inflations, and where India sits Hyperinflation is when prices rise by 50% or more per month. India’s peak annual inflation of 29% (1974) is tiny next to the worst: DR Congo hit 23,773% in 1994, Bolivia 11,750% in 1985, and Argentina 220% in 2024. India has never come close to hyperinflation, which is why the rupee remains a stable currency despite the long erosion of value. ## How India’s shopping basket shifted, 2012 to today The CPI basket is updated periodically to reflect what households actually buy. In 2012, food and beverages made up 45.9% of the basket; by 2024, that share had dropped to 36.8%. Meanwhile, ‘Miscellaneous’ (services, education, health, transport) rose from 28.3% to 36.2%. This shift means the headline inflation number is now less dominated by food and more by services, which tend to have steadier, higher inflation. ## Which categories actually drove the latest inflation In December 2025, the overall CPI inflation was 1.3%. Food and beverages contributed -0.85 percentage points (meaning they pulled the number down), while Miscellaneous contributed +1.75 points. Housing added 0.29 points, fuel and light 0.13, clothing 0.09, and pan and tobacco 0.07. The story is clear: food was deflationary; services kept the headline positive. ## What’s getting dearer fastest right now Among the categories tracked, personal care and effects surged 28.2% in December 2025, miscellaneous (overall) 6.2%, health 3.4%, education 3.4%, pan and tobacco 3.0%, housing 2.9%, fuel and light 2.0%, household goods 1.9%, clothing and footwear 1.4%, recreation 1.2%, and food and beverages actually fell 1.9%. So while groceries got cheaper, services and personal items raced ahead. ## How each part of life got pricier since 2012 The price index for each major group shows cumulative change since 2012 (base=100). By December 2025, pan and tobacco had hit 215.9, food and beverages 202.1, clothing 197.6, miscellaneous 198, health 204.8, education 196.1, housing 186.9, transport and communication 172.4, and fuel and light 181.3. Pan and tobacco lead, driven by tax hikes, but health and education are right behind. ## Food swings drive the headline Because food still makes up over a third of the basket, its violent swings steer the headline. In December 2025, consumer food price inflation was -2.7%, pulling the combined headline down to 1.3%. When vegetables spike, the headline jumps; when they crash, as they did in late 2025, the headline falls. ## How food prices climbed, group by group Within food, cereals reached an index of 197.4 by December 2025, vegetables 210.6, pulses 181.8, oils and fats 196.1, and milk 192.3. Vegetables are the most volatile, while cereals and milk grind up steadily. Pulses and oils have also had sharp spikes. ## The food prices that whipsaw Vegetables inflation in December 2025 was -18.5%, pulses -15.1%, but oils and fats +6.8%. Vegetable prices can halve or double in a year due to weather and supply chains. This volatility feeds directly into household anxiety. ## The price of onion, tomato and potato The iconic trio: onion index reached 201.3 in December 2025, tomato 259.6, and potato 172.5. Tomato has more than doubled since 2014, while potato has had a gentler climb. But their month-to-month inflation can swing wildly, onion fell 48.1% year-on-year, tomato was up 14.4%, and potato down 35%. These are the prices that make headlines and political careers. ## What your groceries cost this year Among individual grocery items, the highest year-on-year inflation in December 2025 was mustard oil at 8.2%, followed by eggs 4.8%, sugar 4.9%, milk 2.5%, while tomatoes (despite the index rise) had 14.4% inflation, potatoes -35%, onions -48.1%, rice -1.3%, and wheat -0.7%. The picture is mixed: some staples were cheaper, others cost more. ## The quiet compounders: health, education, transport Services rarely spike in a single month, but they climb relentlessly. The health index hit 204.8, education 196.1, transport and communication 172.4. Over a decade, these compound to a big jump: a doctor’s visit and school fees double roughly every 10–12 years at current rates. ## The price of school fees, doctors and medicine By December 2025, tuition fees had an index of 204.7, doctor’s fee 223.6, and medicine 203. These are all up from around 100-117 in 2014. Education and health are the expenses families fear most, because they can’t easily cut back. ## The price of fuel and power Petrol index was 140.2, diesel 189.1, LPG cylinder 192.7, electricity 164.9. Since 2014, diesel and LPG have nearly doubled, while petrol has risen more modestly. Government policy and global crude prices drive these numbers, but the impact is felt every time you fill the tank or pay the electricity bill. ## The biggest price moves this year The extremes tell the story of volatility: gold inflation was 68.7%, LPG cylinder 5.5%, mustard oil 8.2%, tomato 14.4%, but onion -48.1%, potato -35%, pulses -5.4%. The average hides these swings. ## Gold: the household hedge against inflation Gold has been an extraordinary performer: its index reached 433.9 by December 2025, meaning its price more than quadrupled since 2014. Year-on-year gold inflation was 68.7%. For Indian households that hold gold as a store of value, this has handsomely beaten the cumulative erosion of the rupee. ## Does your fixed deposit beat inflation? The ‘real return’ on a fixed deposit after subtracting inflation was +4.46 percentage points in December 2025. That means if your FD paid 6.6% and inflation was 1.3%, your purchasing power actually grew. But over the past decade, there were periods (like 2013-2014) when real returns were negative, meaning your money was losing value even in a bank. ## FD rate vs inflation, the two lines behind the gap The bank term-deposit rate was 6.6% in April 2026, while inflation was 1.3%. The gap, the real return, is what matters. Historically, when inflation spikes, the RBI eventually raises rates, but there is always a lag, and savers can suffer negative real returns for months. ## How the RBI fights inflation: the repo rate The RBI’s repo rate was 5.3% in May 2026. By raising this rate, the central bank makes borrowing costlier, which cools demand and eventually dampens inflation. The chart shows how the repo rate and CPI inflation often move in opposite directions: when inflation fell to 1.3%, the RBI cut the repo rate to stimulate growth. ## From the repo rate to your loan EMI The bank lending rate was 9.0% in April 2026, down from a high of 12.5% in 2012. The transmission from repo to lending rate is not instant, but over time, when the repo rate falls, your home loan EMI should come down, though the full benefit takes months to pass through. ## Town and country feel it differently Rural inflation was 0.8% in December 2025, urban 2.0%, and combined 1.3%. The divergence reflects different spending patterns: rural baskets have more food, which was deflationary, while urban baskets have more services. ## Food inflation hits the village harder Rural food inflation was -2.3%, urban -1.1%. When food prices do rise, however, they hit rural households harder because food takes a bigger share of their budget. Right now, both are negative, giving some relief. ## The wholesale pipeline: where prices start Wholesale inflation in April 2026 was 8.3%, with primary articles at 9.2%, fuel and power at 24.7%, and manufactured products at 4.6%. These are the upstream pressures that, with a lag, can filter into retail prices. The sharp spike in fuel WPI is a warning sign for future CPI energy costs. Inflation in India is not one number but a collection of interconnected pressures. It is driven by global commodity cycles, monsoons, monetary policy, and shifting household spending. For the average family, the key insight is that the headline 1.3% in December 2025 was unusually benign, but underlying core inflation remains near 4.6%, and the services you cannot avoid, education, health, rent, continue to compound. Your personal inflation rate almost certainly differs from the CPI, and that is what shapes your sense that ‘everything is getting more expensive’. The data also shows that the best long-term defence is not a fixed deposit alone, but assets that grow faster than the erosion of the rupee, like gold, and perhaps equity. And that is exactly what Indian households have been doing. ## Sources - CPI and WPI data from MOSPI (Ministry of Statistics and Programme Implementation), via their open data portal. - Long-run CPI inflation (1960-2025) sourced from World Bank World Development Indicators, spliced with MOSPI for recent years. - Core inflation and FD returns derived by IndiaDataHub from raw MOSPI and RBI datasets. - International comparisons use World Bank CPI data for each country. --- Source: [This Indian Life](https://thisindianlife.today/articles/why-does-everything-keep-getting-more-expensive/) · Updated 2026-06-03. Licensed CC BY 4.0. 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