CPI inflation base revision: What’s changed, why it matters – BusinessToday

Shopper value index-primarily based inflation for January 2026 rose to 2.75% with meals value inflation at 2.13%. The estimates below the brand new base yr of 2024 are a break from the sooner sequence of 2012.

Aside from the base yr revision, the methodology and information sources for compiling retail inflation below the brand new sequence has additionally been up to date and mirror the modified consumption sample primarily based on the Family Consumption Expenditure Survey 2023-24.

For starters, the burden of the meals and drinks basket has come down within the new sequence. Within the 2024 CPI sequence, meals and drinks has a weight of 36.75. Extrapolating it to the 2012 sequence, which gave a weight of 45.86% to meals and drinks within the general CPI inflation basket, the 2024 weight to the class can be 40.1%.

In the meantime, within the 2024 sequence, housing has been expanded and the revised basket contains housing, water, electrical energy, gasoline and different fuels.

Expanded basket

The classes or baskets within the new sequence of CPI inflation has additionally been expanded to 12 from six within the earlier sequence with the miscellaneous class giving technique to extra granular classes of furnishings, family tools and routine family upkeep; well being, transport, info and communication, recreation, sport and tradition, schooling companies, eating places and lodging companies, private care, social safety and miscellaneous items and companies.

New additions to the merchandise baskets embrace rural housing, on-line media service supplier, streaming companies, worth added dairy merchandise, barley and its merchandise, pen drives and exterior onerous disks, attendants, babysitters and train tools. Outdated gadgets have additionally been eliminated which embrace VCRs, VCDs, DVD participant and hiring expenses, radio, tape recorder, second hand clothes, CD/DVD audio, video cassettes and coir/ rope, as per an official launch.

General, within the 2024 sequence, as many as 308 items and 50 companies can be tracked for costs as in comparison with 259 items and 40 companies within the 2014 sequence. Worth information shall be captured from extra markets – 1,465 rural markets, 1,395 city markets and 434 cities within the new sequence as in opposition to 1,181 rural markets, 1,114 city markets and 310 cities within the previous sequence.

Additional, 12 on-line markets shall be tracked each week for costs throughout main cities have over 25 lakh inhabitants in an effort to seize value motion on e-commerce platforms.

Newest financial transformations captured

Chief Financial Advisor V Anantha Nageswaran famous that the economic system has undergone a major transformation up to now decade, which can now be mirrored within the modifications within the new CPI sequence.

“For the reason that basket is now aligned with the latest expenditure information, the inflation alerts will match with prevailing financial situations,” he instructed reporters, including that this may enhance the knowledge foundation for calibrating financial and monetary coverage.

Responding to a query on core inflation, Saurabh Garg, Secretary, Ministry of Statistics and Programme Implementation mentioned that this may be determined by the Reserve Financial institution of India on what gadgets to incorporate for calculating core inflation.

MOSPI can be planning to undertake the following HCES in 2027-28, which would be the foundation of the following CPI inflation sequence, he mentioned. The ministry hopes to revise the base yr each 5 years, he mentioned.

Consultants famous that the brand new retail inflation sequence has an analogous trajectory to the previous sequence. “The distinction in m-o-m CPI inflation between 2024 and 2012 base yr sequence from February 2025 to December 2025 ranges between unfavorable 16bp to 34bp and it averaged 0.2bp in 11 months. This factors in the direction of an analogous inflationary trajectory within the 2024 sequence with that of the 2012 sequence,” mentioned Paras Jasrai, Affiliate Director, India Rankings and Analysis.

Madhavi Arora, Chief Economist, Emkay International Monetary Providers mentioned the company doesn’t anticipate the brand new inflation sequence to materially affect coverage within the close to time period. “An prolonged fee pause appears to be like probably, underpinned by a cyclical upturn in each development and inflation and enhancing confidence following the conclusion of the US–India commerce negotiations,” she mentioned.