As it stated in the documentation, pip-tools look for the configuration file “in the same directory as your requirements input files”. However, due to the way click works, it's not true:

1. --config (and --no-config) is declared as eager: https://github.com/jazzband/pip-tools/blob/7.4.1/piptools/scripts/options.py#L317-L333
2. --config's callback override_defaults_from_config_file tries to get the src_files param value to compute the config path relative to the source files: https://github.com/jazzband/pip-tools/blob/7.4.1/piptools/utils.py#L543
3. But since callbacks of eager options are called before other options are processed, src_files is always empty. From the click documentation: “All eager parameters are evaluated before all non-eager parameters, but again in the order as they were provided on the command line by the user.”
4. select_config_file falls back to the current working dir as a config file location: https://github.com/jazzband/pip-tools/blob/7.4.1/piptools/utils.py#L627-L630

Environment Versions

1. Linux
2. Python version: Python 3.12.3
3. pip version: pip 24.0
4. pip-tools version: pip-compile, version 7.4.1

Steps to replicate

1. Create the requirements directory requirements/ with requirements.in.
2. Create the configuration file .pip-tools.toml or pyproject.toml with generate-hashes = true.
3. Run pip compile requirements/requirements.in.

Expected result

requirements/requirements.txt contains hashes.

Actual result

requirements/requirements.txt has no hashes; the configuration file is ignored.