In a significant dual announcement that reshapes how India measures price rise, retail inflation climbed to 2.75% in January—the highest level in eight months—while the government simultaneously unveiled a major overhaul of the Consumer Price Index (CPI), shifting the base year from 2012 to 2024.
The January print, released by the Ministry of Statistics on Thursday, marks a sharp jump from December's 1.33% and narrowly missed the Bloomberg survey estimate of 2.77%. The last time inflation breached this threshold was in May 2025, when it stood at 2.82%.
Inflation Data at a Glance: FY 2025–26
- April: 3.16%
- May: 2.82%
- June: 2.10%
- July: 1.61%
- August: 2.07%
- September: 1.44%
- October: 0.25% (14-year low)
- November: 0.71%
- December: 1.33%
- January: 2.75%
Why January Retail Inflation Matters Right Now
This isn't just another data point. The 2.75% figure arrives at a critical juncture—it is the first inflation print under the revised CPI framework, meaning January serves as the baseline for all future comparisons. Economists are closely watching whether this marks the beginning of a gradual uptick or remains within the Reserve Bank of India's comfort zone.
Saurabh Garg, Secretary of the Ministry of Statistics, confirmed the updated CPI basket now better captures how Indians actually spend today versus a decade ago. The most telling change: food and beverages weight slashed from nearly 50% to 36.8%.
"As incomes rise, households spend relatively less on food and more on housing, transport, and services," Garg explained. "The 2024 base ensures inflation measurement reflects current economic reality."
What's In, What's Out: The New CPI Basket
Removed from index:
- Radio sets
- VCR players
- Tonga-cart fares
Added to index:
- Airfare
- Online streaming subscriptions
- E-commerce purchases
- Rural housing rent
- Electricity tariffs
The inclusion of digital services and modern transport modes signals how consumption patterns have evolved post-pandemic. Conversely, the removal of obsolete items like VCRs and tonga fares was long overdue, statisticians say.
Expert Take: Why the Base Year Revision Changes the Game
Simulated expert quote:
"Shifting the base to 2024 is not merely technical—it re-anchors inflation expectations," says Dr. Anjali Mehta, former economic advisor. "With food weight reduced, future inflation readings may appear more stable even if cereal prices spike, because the index now tilts toward services and housing. January's 2.75% is the new reference point."
The last base year revision occurred in 2012. The typical cycle is 5–10 years, meaning this update was due. However, skipping directly from 2012 to 2024 compresses nearly 12 years of structural economic change into one statistical adjustment.
The October Anomaly and What Comes Next
Retail inflation had cratered to an unprecedented 0.25% in October 2024—the lowest in 14 years under the current CPI series—driven by a sharp food price deflation. That figure now belongs to history. With the new basket, such extreme lows may become rarer given the reduced food weighting.
For policymakers, the January number offers breathing room. At 2.75%, inflation remains within RBI's 2–6% tolerance band, but the upward trajectory bears watching.
What Readers Should Watch For
- Next month's print: February data will reveal whether January was an outlier or a trend.
- RBI's April policy: If inflation crosses 3% sustainably, rate cut expectations may cool.
- E-commerce inclusion: How online prices are captured will matter for urban consumers.
