New Delhi (Economy India): India’s retail inflation (CPI) rose to 2.75% in January, marking its highest level in eight months, up from 1.33% in December, according to data released by the Ministry of Statistics and Programme Implementation.
The last time inflation was higher was in May 2025, when it stood at 2.82%. The January reading broadly matched market expectations, with economists surveyed by Bloomberg projecting inflation at around 2.77%.
CPI Base Year Revised to 2024
In a major methodological update, the government has revised the CPI base year from 2012 to 2024, the first such revision in over a decade. The move aims to better reflect current consumption patterns and price behaviour in the Indian economy.
OTT, Online Shopping Added; Food Weight Reduced
One of the most notable changes in the revised CPI basket is the inclusion of new-age consumption items, such as:
- OTT and online subscriptions
- E-commerce shopping
- Air travel fares
- Rural housing rent
- Electricity prices
At the same time, obsolete items such as radio sets, VCRs, and horse-cart transport fares have been removed.
The weight of food and beverages has been reduced from nearly 50% to 36.8%, reflecting changing spending habits. According to officials, rising incomes have led households to spend proportionately less on food and more on housing, transport, and services.
Why Base Year Matters
The base year is the reference year against which price changes are measured. Prices in the base year are assigned an index value of 100, and inflation is calculated relative to this benchmark. Governments typically revise the base year every 5–10 years to ensure inflation data remains accurate and relevant.
Experts: Change Improves Policy Accuracy
Economists say the revision will provide a more accurate picture of inflation, particularly for non-food items. The reduced food weight means price movements in housing, services, and discretionary spending will now have greater visibility.
Experts also note that the updated CPI framework will be more useful for monetary policy decisions, including interest rate settings.
Inflation Trend
Retail inflation had touched a 14-year low of 0.25% in October, driven by falling food prices under the old CPI series. The recent rise reflects both base effects and gradual firming in non-food components.
(Economy India)
