India’s New CPI Series – A Structural Reset of Retail Inflation Measurement

New CPI Series Latest News

• On February 12, 2026, the Ministry of Statistics and Programme Implementation (MoSPI) released India’s first retail inflation data under the new Consumer Price Index (CPI) series (Base Year: 2024=100).
• Retail inflation for January 2026 stood at 2.75% (provisional) — the first official reading under the revised framework.
• This revision replaces the earlier 2012 base year, reflecting changes in consumption behaviour, market structures, and household expenditure patterns, as captured by the Household Consumption Expenditure Survey (HCES) 2023–24.

Why a New CPI Series?

• India’s economy has undergone structural transformation over the past decade.
• For example,
  • Rising share of services
  • Growth of digital consumption
  • Shift toward cleaner fuels
  • Changing food patterns
  • Expansion of online marketplaces
• The new CPI aligns inflation measurement with current consumption realities, thereby improving its relevance for monetary policy (RBI), fiscal policy calibration, wage indexation, welfare schemes, GDP deflation and national accounts.
• Significance for monetary and fiscal policy:
  • The CPI is the primary inflation measure for RBI’s Monetary Policy Committee (MPC), linked to the inflation targeting framework (4% ± 2%), and is used for DA revisions, poverty estimation, real income calculation, welfare transfers.
  • Lower weight of volatile food items may reduce short-term fluctuations, and provide clearer inflation signals.

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Key Structural Changes in the New CPI

• Updated base year: Changed from 2012 to 2024, ensuring contemporary relevance.
• Adoption of international classification: 
  • The new series adopts 12 consumption divisions in line with the COICOP 2018 (Classification of Individual Consumption According to Purpose) framework.
  • 12 divisions (more granular) from earlier structure (6 groups) enhances comparability with global inflation standards.
• Expanded coverage of items: Total items increased from 299 to 358 (goods increased to 308 from 259, and services from 40 to 50). This reflects growth of the services economy, and modern consumption patterns.
• New items added:
  • Rural house rent (introduced for the first time)
  • Online media and streaming services
  • Value-added dairy products
  • Barley and related products
  • Pen drives, external hard disks
  • Attendant and babysitter services
  • Exercise equipment
  • Cleaner fuels (CNG/PNG)
• Removed items: VCR/VCD/DVD players, tape recorders, radios, CD/DVD cassettes, second-hand clothing, coir/rope, reflecting technological obsolescence and lifestyle shift.
• Wider data collection:
  • The new series collects data from more sources across the country. For example, data is collected from 1,465 rural markets (up from 1,181) and 1,395 urban markets (up from 1,114). 
  • The new series also collects data from 12 online marketplaces. Inclusion of online platforms is a major methodological advancement.

Revised Weight Structure – Changing Consumption Patterns

• Food and beverages:
  • Weight reduced to 36.75% (from 45.86%).
  • Implication: Headline inflation may become less volatile, as food prices are typically unstable. Food still remains the largest component.
• Housing (expanded category):
  • Weight increased from 10.07% to 17.67%.
  • Now expanded to include water, electricity, gas, and other fuels. Also introduces rural house rent, improving representativeness.

Inflation Numbers (January 2026)

• Headline CPI Inflation (2.75%): Rural: 2.73%, Urban: 2.77%
• Food Inflation (CFPI): 2.13%
  • Rural: 1.96%
  • Urban: 2.44%
• Housing Inflation: 2.05%
  • Rural: 2.39%
  • Urban: 1.92%
• Historical comparison is limited since this is the first release under the new base. A linking factor has been provided to compute backward-compatible index values up to 2013.

Challenges and Way Forward

• Comparability issues: Break in time series complicates long-term analysis. Integrate CPI data with big data analytics.
• Data consistency: Linking factor may not perfectly replicate old series trends. Enhance transparency in linking methodology. 
• Food weight reduction debate: India remains a lower-middle-income economy where food inflation impacts welfare significantly. Ensure regular revision cycles (every 5–10 years).
• Rural representation concerns: Despite expansion, informal consumption may still be underreported. Strengthen rural data infrastructure. Increase public statistical literacy.
• Online price volatility: Digital marketplace pricing can fluctuate dynamically. Improve real-time digital price collection systems.

Conclusion

• The launch of the CPI Base 2024 series marks a crucial reform in India’s statistical architecture. 
• By aligning inflation measurement with contemporary consumption patterns and international standards, the new series enhances the reliability of inflation signals for policymakers.
• However, maintaining continuity, credibility, and transparency will be essential to ensure that the CPI remains a trusted macroeconomic anchor in India’s inflation-targeting regime.
• In essence, this is not just a statistical update—it is a recalibration of how India measures the cost of living in a transforming economy.

Source: TH