RBI May Cut Rates Despite Soaring Vegetable Prices; Inflation Eases Slightly

• India's CPI inflation rose to 1.3% in December from 0.71% in November, primarily due to increased vegetable prices.
• Food inflation reached 2.7% in December, a significant jump from -3.9% in November, but experts see improvement.
• Headline inflation in December was driven by higher prices for personal care, vegetables, meat, fish, eggs, spices, and pulses.
• Elara Capital's Garima Kapoor anticipates a 25 basis point RBI rate cut in February 2026, with FY26 CPI inflation potentially lower than RBI projections.
• Despite rising vegetable costs, overall retail inflation remained below RBI's 4% target for the fourth consecutive month, offering public relief.

Why It Matters: Despite rising vegetable prices, India's inflation remains manageable, hinting at a potential RBI rate cut.