India's retail inflation at 2.75% in Jan under new CPI 2024 series

India’s retail inflation was recorded at 2.75% in January, marking a debut for a new series with the 2024 base year. The numbers can't be compared with the previous month's figures due to the much-awaited reset of the consumer price index basket.

Inflation under the old CPI 2012 series was 1.33% in December and 0.71% in November. But the statistics ministry on Thursday released back-series data until 2024, so strictly comparable readings are not available for the two months.

The January print was below estimates. Economists had flagged that food prices had bottomed out and that there were early signs of inflationary pressures firming up.

While CPI-based inflation has been at the lower band of the Reserve Bank of India’s (RBI) 2-6% target range in six of the past seven months, the central bank’s rate-setting panel kept key policy rates unchanged in its latest monetary policy move.

Retail inflation under the new series stood at 2.75% in January 2026, while food inflation was 2.13%.

Inflationary pressure in January was largely on account of price volatility in the metal segment, particularly silver, said Saurabh Garg, secretary at the ministry of statistics and programme implementation (MoSPI).

Silver jewellery remained the top item with all-India combined inflation at 159.67%. Inflation of gold, diamond and platinum jewellery also remained high in January at 46.77%, while inflation in a large number of food items remained moderate.

Aditi Nayar, chief economist at Icra Ltd, said the new CPI series is not comparable to the old series owing to changes in composition, weights, and calculation methodology. “Nevertheless, with a dip in the weight of the food and beverages (F&B) segment, we had expected the headline print to be slightly higher than our estimate of 2.5% for January 2026 as per the old series, which has been the case,” she said.

The headline CPI inflation under the new series is well below the mid-point of the monetary policy committee’s target range of 2%-6%, she said. “The year-on-year (YoY) inflation rates across 11 of the 12 divisions of the CPI ranged between 0.1% and 3.4%, i.e. below the 4%-mark, with the personal care, social protection and miscellaneous goods and services being the outlier with a 19.0% inflation, largely reflecting the boom in gold and silver prices.”

New CPI series

The sharp uptick in consumer inflation in January also reflects the base-year revisions for the very first time. Starting with the January 2026 inflation print, the country has shifted to an updated CPI that better reflects how Indians spend their money today.

The new index, which will use 2024 as its base year, is built on spending patterns captured in the 2023-24 Household Consumption Expenditure Survey (HCES), the statistics ministry said on Thursday.

The recalibrated weights for the CPI components under the new series have pushed up India’s headline inflation readings modestly, with the share of core items rising around 10 percentage points and volatile food prices getting a smaller say, according to economists’ estimates.

With the weight of food and beverages sharply reduced by nearly one-fifth from the current 45.86% to 36.75% in the new series, economists reckon the relatively higher core inflation recorded in recent months could raise the headline retail inflation at the margin. Core inflation is calculated by excluding the volatile components of CPI such as food and energy, and was estimated to be around 4.6% in December 2025, when overall retail inflation was 1.3%.

The new CPI series raises housing’s share, reshaping inflation measurement, easing volatility, and altering how the RBI interprets headline inflation trends.

Food items account for a large share of India’s Consumer Price Index (CPI), meaning sharp swings in food prices often dominate headline inflation, pushing it up or down irrespective of broader price trends. From June 2025, food inflation turned negative, with prices consistently lower than a year earlier. This sharply pulled down headline CPI inflation, which fell to an all-time low of 0.25% in October 2025, alongside record-low food inflation of –5.02%.

Impact of new CPI weights

According to experts, recalculating CPI with new weights but unchanged indices suggests overall CPI could be 20-30 basis points higher than under the current series when food inflation is low, and 20-30 basis points lower when food inflation is high.

“Our preliminary assessment is that the expected uptick (as per the old series) in the CPI inflation in FY2027 relative to FY2026 was largely anticipated to be driven by the F&B segment. With a somewhat lower weight for F&B in the new series vis-à-vis the old series, the expected base-effect-led uptick in the headline print in FY2027 would likely be tempered,” Icra’s Nayar said.

With another CPI inflation print for February due to be released before the next MPC meeting, there may be some more clarity on interpreting the CPI data, she said. “Besides, the new GDP series is also set to be released at end-February 2026, which may lead to revisions in the size of the economy as well as the quarterly growth rates during FY2024-2026. These data points will be key to reassess India’s growth-inflation mix and the direction of monetary policy action.”

Sujan Hajra, chief economist & executive director at Anand Rathi Group, said the print indicates a firming in price momentum compared with the unusually soft readings seen toward the end of 2025, when food prices had kept headline inflation subdued.

“Even with the uptick, inflation remains comfortably below the RBI’s 4% target, suggesting overall price pressures are still contained,” Hajra said. Looking ahead, inflation is expected to edge higher gradually as base effects fade and food inflation picks up gradually, he said.

CEA’s take on new series

The new CPI series provides policymakers with a more up-to-date basis for assessing real incomes, consumption trends, and purchasing power, he said, adding that a lower weight for the otherwise-volatile group of food and beverages may make the headline inflation less volatile.

“Inflation now could become more driven by core (inflation) rather than food. And in that sense, policy response, monetary policy response in particular, could become more focused on aggregate demand pressures rather than dealing with supply-induced inflation, and dealing with it through demand-sensitive variables like interest rates,” said Nageswaran.

The CEA also sees lower volatility under the new series helping anchor inflation expectations in households and businesses. “If CPI volatility declines, it means that fiscal expenditure volatility, such as DA fixation, inflation-indexed bonds, etc, which are linked to CPI, would also become more stable and more predictable and reliable, and this could give better budget predictability and disability as well to fiscal numbers.”

According to Nageswaran, by extending rent measurement to rural areas and improving sampling coverage, the CPI now captures housing costs more accurately across regions.

“This leads to a better measurement of the rural cost of living, reducing the urban bias in inflation estimation. As a result, poverty estimates become more accurate since real consumption and real income calculations depend directly on CPI,” he said. “Improved cost-of-living measurement also enhances the targeting efficiency of welfare schemes, ensuring that benefits, subsidies, and social transfers are better aligned with actual regional priced realities.”