Why does everything keep getting more expensive?

Personal care and effects shot up 28.2% in December 2025, while food and beverages fell 1.9%.

This bar chart ranks categories by their year-on-year inflation rate in December 2025. Personal care and effects lead at 28.2%, followed by 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 1.4%, recreation 1.2%, and food and beverages at -1.9%. The extreme disparity shows that the headline 1.3% is an average that hides a wide spread: some items like gold and mustard oil are surging, while vegetables and pulses are plunging.

Prices in 2025 were 92.1 times higher than in 1960.

This line chart plots how many times prices have multiplied since 1960, using World Bank CPI data. Starting at 1 in 1960, the multiple rises slowly at first, then steepens after the 1970s. By 2025, it reaches 92.1, meaning a basket that cost Re 1 in 1960 costs ₹92.10 today. This dramatic rise is the result of decades of cumulative inflation, averaging around 5-6% per year. The chart uses a linear scale, so the acceleration is visible, but the real lesson is that even ‘moderate’ inflation over a long period can produce a huge increase in the price level.

Annual CPI inflation has swung from 29% in 1974 to 2.2% in 2025, and has generally moderated since the 1990s.

This annual time series from the World Bank shows the year-on-year change in consumer prices. The spikes in 1974 (29%) and 1981 (20%) stand out, linked to oil shocks and monsoons. After 1991, inflation became less volatile, hovering in the 5-10% range. The 2025 figure of 2.2% is one of the lowest in decades, helped by falling food prices. The chart illustrates that inflation is not a new phenomenon, and that India has experienced much higher rates in the past without becoming hyperinflationary.

Monthly CPI inflation has varied between 12.2% and 1.3%, with food often driving the swings.

From the MOSPI CPI combined general index, this line chart tracks year-on-year inflation each month from January 2012 to December 2025. It started at 6.3%, spiked to 12.2% in November 2013, then generally declined with periodic surges (e.g., 7.6% in July 2020). The recent plunge to 1.3% in December 2025 was largely due to a sharp drop in food prices. The chart shows that even within a low-inflation decade, monthly rates can swing widely, affecting household budgets and RBI policy.

In December 2025, core inflation was 4.6% versus headline 1.3%, revealing underlying price pressures.

This multi-line chart overlays headline CPI inflation, core inflation (ex-food & fuel), and food inflation alone. Since 2012, core inflation has generally been lower than headline except when food spikes. But in late 2025, core at 4.6% far exceeded headline 1.3% because food inflation turned negative (-2.7%). Core tracks services and manufactured goods, which have steady demand and fewer supply shocks. The chart shows that even when headline drops, core can stay elevated, signalling that the economy’s underlying price trend has not disappeared.

While CPI inflation was 1.3% in December 2025, WPI inflation shot up to 8.3% in April 2026, signalling pipeline pressure.

CPI and WPI measure different baskets at different stages. CPI is what consumers pay; WPI is what producers pay. This chart plots both since 2013. WPI is more volatile because it includes globally priced commodities. In 2025-26, WPI surged due to fuel and primary articles, while CPI stayed low because food and retail fuel lagged. The wide gap is a reminder that low consumer inflation today does not guarantee low inflation tomorrow, as wholesale costs often pass through with a delay.

India’s 5.0% inflation in 2024 was moderate, higher than the US and China, but far below Bangladesh’s 10.5%.

This multi-line chart compares annual CPI inflation for India, the US, China, Brazil, Indonesia, Vietnam, Bangladesh, and South Africa from 1960 (or earliest available). India’s line (5.0% in 2024) runs above the US and China, around the middle of the pack. Bangladesh has recently experienced double-digit inflation. Brazil, once hyperinflationary, has stabilised. The chart shows that while Indian inflation is not exceptional, it has been persistently higher than advanced economies, reflecting structural factors like food weight and supply chain inefficiencies.

India’s peak inflation of 29% in 1974 is dwarfed by peaks like DR Congo’s 23,773%, Bolivia’s 11,750%, and Argentina’s 220%.

This bar chart on a log scale shows the worst annual CPI inflation ever recorded in selected countries. DR Congo tops at 23,773% in 1994, followed by Bolivia (11,750% in 1985), Peru (7,482% in 1990), Angola (4,145% in 1996), Brazil (2,948% in 1990), Israel (373% in 1984), Argentina (220% in 2024), Türkiye (105% in 1994), and then India (29% in 1974). India’s 29% looks tiny in comparison. This puts India’s worst inflation into perspective: we have never experienced hyperinflation, and the rupee has remained a credible store of value relative to many currencies.

Food’s share of the basket fell from about 46% to 37% in just over a decade, the clearest sign that Indian incomes are rising.

As households earn more, they spend a smaller fraction on food and more on everything else, health, education, transport, eating out. That is Engel’s law, and it is the whole story of these two strips: between the 2012 and 2024 bases, food and beverages dropped roughly nine percentage points while the ‘services & other’ bucket swelled from 28% to 36%. Housing, clothing and tobacco barely moved.

Miscellaneous contributed 1.75 percentage points to the 1.3% headline, while food and beverages subtracted 0.85 points.

This bar chart shows the contribution of each major CPI group to the overall inflation in December 2025. Contributions are in percentage points. Food and beverages had a negative contribution of -0.85, meaning it lowered the headline by nearly 0.9 points. Miscellaneous added 1.75 points, housing 0.29, fuel and light 0.13, clothing 0.09, and pan and tobacco 0.07. So even though the headline was only 1.3%, it was entirely due to services and housing offsetting food deflation. Without the food drag, inflation would have been around 2.2%.

By December 2025, pan and tobacco prices had more than doubled (index 215.9), while transport and communication rose the least (172.4).

This multi-line chart plots the price indices (2012=100) for the six major CPI groups from January 2011 to December 2025. All lines rise, but at different slopes. Pan and tobacco is the steepest, driven by sin taxes. Food and beverages, despite volatility, ended at 202.1, roughly doubling. Miscellaneous (198), clothing (197.6), health (204.8), education (196.1), housing (186.9), and transport (172.4) all show cumulative inflation of 70-100% over 14 years. The compounded effect means that even if annual rates seem low, the long-term impact is substantial.

Health prices have more than doubled since 2012 (index 204.8), while transport grew 72%.

This line chart tracks the price indices for health, education, and transport & communication. All show a steady upward march with few dips. Health rose from 89.5 in January 2011 to 204.8 in December 2025; education from 87 to 196.1; transport from 90.3 to 172.4. Unlike food, these services rarely fall in price because labor and fixed costs dominate. The annual inflation rates in these categories have been consistently 3-5%, but compounding over 14 years leads to near-doubling. This is why families feel the squeeze on essential services year after year.

When food inflation crashes (e.g., -2.7% in December 2025), the headline inflation plunges to 1.3%.

This chart overlays consumer food price inflation and headline CPI inflation since 2012. The two lines move almost in tandem, with food slightly more volatile. In December 2025, food inflation was -2.7% and headline 1.3%. Earlier, when food spiked in 2020, headline followed. Because food still weighs over a third in the basket, its gyrations dominate the monthly swings. This explains why inflation can feel like a rollercoaster even though underlying non-food prices are sticky.

Vegetables reached an index of 210.6 by December 2025, while milk was at 192.3 and cereals 197.4.

This chart plots price indices for five food sub-groups: cereals, vegetables, pulses, oils & fats, and milk. Vegetables show the wildest swings, spiking during supply shocks. Cereals and milk climb more steadily. By December 2025, vegetables had risen 110.6% from 2012, while milk rose 92.3%. Oils and fats also saw a big run-up, particularly in 2021-22, but then moderated. This breakdown shows that not all food items are equally inflationary; staples like cereals and milk are more predictable, while vegetables remain the joker in the pack.

Tomato index hit 259.6 in December 2025, while onion was 201.3 and potato 172.5.

This trio of lines tracks the price indices for the three most politically sensitive vegetables. All start at varying levels in 2014 (onion 173.4, tomato 101.3, potato 122.1). Tomatoes have seen the most dramatic increase, more than doubling, while onions and potatoes have also risen but with large fluctuations. Year-on-year, onion inflation was -48.1%, tomato +14.4%, potato -35% in December 2025, showing how even within the same month, different vegetables can move in opposite directions. These extreme moves affect not just household budgets but also political narratives.

Mustard oil led with 8.2% inflation, while onion crashed 48.1% and potato 35%.

This bar chart shows the year-on-year inflation for select grocery items in December 2025. Mustard oil (8.2%), eggs (4.8%), sugar (4.9%), milk (2.5%), and tomatoes (14.4%) were up. But rice (-1.3%), wheat (-0.7%), pulses (-5.4%), potato (-35%), and onion (-48.1%) were down. This mixed picture means a vegetarian thali might have cost less in December 2025 than a year ago, but an edible oil-based item was pricier. The chart conveys that inflation is not uniform even within a single shopping trip.

Doctor’s fee index hit 223.6, tuition fees 204.7, and medicine 203 by December 2025.

This chart zooms into three specific services: tuition fees, doctor’s fees, and medicine. From 2014 onwards, all three have climbed relentlessly. Doctor’s fees have risen the most, likely driven by healthcare inflation and higher practice costs. Tuition fees reflect the rising cost of education, often outpacing general CPI. Medicine prices, while regulated to some extent, have also doubled. The steady upward trajectory without any significant reversals underscores that these are the expenses you cannot avoid and that will only get costlier over time.

Diesel index rose to 189.1 and LPG to 192.7, nearly doubling since 2014, while petrol rose to 140.2.

This chart tracks the price indices for petrol, diesel, LPG, and electricity. Diesel and LPG have risen the most because of periodic price deregulation and global oil price movements. Petrol has been relatively stable in recent years after earlier spikes. Electricity, often a regulated price, has risen more slowly but still reached an index of 164.9. The chart shows the direct impact of government policy and international markets on household energy costs. With the WPI fuel inflation at 24.7% in April 2026, further pressure on consumer prices may be ahead.

Gold surged 68.7%, while onion crashed 48.1% in December 2025.

This bar chart captures the extreme outliers in year-on-year inflation for December 2025. Gold’s 68.7% jump stands out, reflecting global safe-haven demand and currency depreciation concerns. Mustard oil rose 8.2%, LPG 5.5%, tomato 14.4%. On the downside, onion fell 48.1%, potato 35%, and pulses 5.4%. These extremes show that inflation is not a uniform wave but a collection of micro-shocks. For households, the impact depends on their consumption basket: a gold-buying family saw a big expense rise, while a vegetarian kitchen felt relief.

In December 2025, the real return on an FD was +4.46 percentage points, after years of occasionally negative returns in the past.

This chart computes the real return by subtracting CPI inflation from the average term deposit rate. From March 2013, the series has been positive for most months but dipped below zero in 2013-14 and briefly in 2020. The real return peaked in late 2025 as inflation crashed. A positive real return means your money is growing in purchasing power; a negative one means even though your account balance rises, you can buy less. This is why savers need to watch both interest rates and inflation, not just the nominal FD rate.

The repo rate was cut to 5.25% in May 2026 as inflation collapsed to 1.3%.

This chart overlays the RBI’s policy repo rate and CPI inflation from 2001 onwards. The repo rate is the main tool to control inflation: raising it cools demand, lowering it stimulates growth. The chart shows that when inflation spiked (e.g., 2010, 2013), the repo rate was raised with a lag. In 2025-26, as inflation plunged, the RBI cut the repo rate to boost the economy. The inverse relationship is clear: high inflation leads to high repo rates, and vice versa. This is the mechanism that eventually feeds into your loan and deposit rates.

Bank lending rate fell from 12.5% in 2012 to 9.0% in April 2026, tracking the repo rate.

This chart compares the repo rate and the weighted average lending rate of scheduled commercial banks. The lending rate moves in step with the repo rate, but with a lag and a spread. In recent years, as the repo rate was cut from 6.5% to 5.25%, the lending rate fell from around 10% to 9%. This transmission is important for borrowers: a lower repo means lower EMIs on floating-rate home loans. However, the full transmission can take months, and banks often adjust deposit rates faster than lending rates.

Rural inflation was 0.8% in December 2025, urban 2.0%, and combined 1.3%.

This chart plots rural, urban, and combined CPI inflation since 2012. Rural and urban inflation usually move together, but there are temporary divergences. In December 2025, rural inflation was lower because food, which has a higher weight in rural areas, was deflationary. Urban areas, with a larger services share, saw slightly higher inflation. These differences mean that a single national number does not fully capture the price experience across India’s diverse regions. The combined figure, which is the weighted average, is the official headline.

WPI fuel and power inflation shot up to 24.7% in April 2026, signalling potential future consumer price rises.

This chart breaks down wholesale inflation into primary articles, fuel and power, and manufactured products. Primary articles (food, minerals) were up 9.2%, fuel and power 24.7%, and manufactured goods 4.6% in April 2026. These are the costs that producers face, which may eventually be passed on to consumers. The fuel spike is particularly worrying because it feeds into transport and electricity, which affect almost every product. WPI is more globally exposed, so movements in crude oil and commodity prices show up here first.