Food prices fall, inflation nears zero for rural and farm workers — Here’s why

Inflation brought some much-needed relief for India’s rural and agricultural labourers in December 2025, as prices remained almost flat and food costs stayed in negative territory. Data released by the Ministry of Labour & Employment on Wednesday shows that inflation levels for these groups were among the lowest in recent years.

Due to such a decrease in inflation, rural and agrarian labourers are constrained to spend less and less on their day-to-day living, especially on food.

What was the inflation rate for agricultural and rural labourers?

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According to official data, the year-on-year inflation rate based on the Consumer Price Index for Agricultural Labourers (CPI-AL) stood at 0.04 per cent in December 2025. For Rural Labourers (CPI-RL), inflation was slightly higher at 0.11 per cent.

These numbers show that prices for essential goods barely increased compared to December last year. Such low inflation is seen as a big relief for these vulnerable sections, who are often the hardest hit when prices rise.

Why is food inflation still negative?

Food inflation for both agricultural and rural labourers remained in the negative zone during December. Food inflation stood at (-) 1.8 per cent for agricultural labourers and (-) 1.73 per cent for rural labourers.

The main reason for the decline in food prices was the increase in production, which resulted in greater availability and thus the price of food items went down. The falling food prices favour the poor and rural families immediately, as the majority of their monthly expenses are on food.

How does lower inflation help rural workers?

The gradual decline in inflation over the past months is a blessing for the rural and agricultural workers. The lowering of prices means that they can save a larger amount of money or use it for other necessities such as clothing, education, or household goods.

According to experts, price stability is a factor that contributes to improving standards of living and reducing financial strain. When inflation stays at lower levels, it becomes easier for families to plan their expenditures and stay away from debt.

What has changed in CPI calculation for labourers?

From June this year, the Labour Bureau under the Ministry of Labour & Employment has changed the base year for CPI-AL and CPI-RL to 2019=100. The new series has already expanded with respect to the number of items covered – it now has 150-200 items against the previous 65-106 items.

Furthermore, the new system applies an “admissibility” criterion for PDS items, and this has resulted in a more accurate and trustworthy index.

CPI depicts a mixed trend for agriculture and rural labourers in December 2025

Agricultural Labourers: The All-India Consumer Price Index (CPI) for agricultural labourers indicated a very small drop in the overall index in December 2025 as compared with November. The decline in the prices of food and non-alcoholic beverages during the month contributed to the maintenance of food inflation at a low level. However, the prices of fuel and light, clothing and footwear, and miscellaneous items went up slightly. The data indicate that the price pressure for agricultural workers was largely stable during the period, although the softer food prices gave them some relief.

Rural Labourers: The CPI data for rural labourers also showed a small fall in the general index in December 2025 compared to November. Food prices continued to decline, a sign of a better supply situation, while among the categories that registered very minor increases were fuel and light, clothing and footwear, and miscellaneous items. Despite these minor increases, the overall price situation for rural labourers stayed under control, pointing to a broadly stable inflation environment during the month.

What is the overall inflation picture in India?

In December 2025, India's cumulative inflation rate calculated with the Consumer Price Index (CPI) was recorded at 1.33 percent which was a little more than the 0.71 per cent of November. Despite this, the inflation situation is still being considered as under total control.

The Reserve Bank of India (RBI) has acknowledged the decline in the inflation trend. The RBI last month reduced its inflation projection for FY 2025-26 to 2 per cent, reduced from 2.6 per cent earlier, mainly due to the decrease in food prices and GST rate cuts.

RBI Governor Sanjay Malhotra also declared a 25 basis point reduction in the repo rate, which is now 5.25 per cent, to encourage economic growth as inflation slows down.