NE ECONOMIC BUREAU
CHENNAI, FEB 13
India’s newly released Consumer Price Index (CPI) series confirms that retail inflation remains firmly below 3%, reinforcing the broad disinflationary trend observed over the past year and supporting expectations of policy stability from the Reserve Bank of India (RBI).
To enhance the coverage and representativeness of the inflation measure, the Ministry of Statistics & Programme Implementation has revised the Base Year for the Consumer Price Index (CPI) from 2012 to 2024.#CPI #ConsumerPriceIndex pic.twitter.com/OvURUTM54b
— Ministry of Information and Broadcasting (@MIB_India) February 12, 2026
According to Treasury Research dated 13 February 2026, January 2026 CPI stood at 2.75% under the new series, compared to 1.2% in December 2025 (estimated using a linking factor of 0.5267). On a sequential basis, headline CPI rose 0.3%.
- January 2026 CPI at 2.75% Under New 2024 Base Year, Sequential Rise of 0.3%
- Inflation Averages 1.8% in FY26; Treasury Research Sees 2.1% for FY26, 4.3% for FY27
- Food at 2.1%, Core at 3.4% as Basket Weights Shift in 354-Item Framework
- Lower Gold Weight, Revised Housing Methodology Temper Core Pressures
- New GDP Series Later This Month May Shape Monetary Policy Outlook
“Broadly, the data does not present any major negative surprise and confirms the moderating inflation trend witnessed over the last 12 months,” the report noted.
However, Treasury Research cautioned that inflation could edge higher in the coming months due to a lower base effect and a pickup in food and core momentum.
No Further Rate Cuts Seen in FY27
The new CPI series indicates inflation has averaged 1.8% so far in FY26—broadly unchanged from the old series average.
“The new CPI series doesn’t change our view of no further rate cuts from the RBI in FY27 and expect continued focus on transmission and liquidity. We estimate inflation at 2.1% for FY26 and 4.3% for FY27,” the report stated.
It added, “The new GDP series (to be released later in February) is likely to provide colour on how the growth dynamics are playing out and could have implications for scope and direction of monetary action.”
Food Inflation: Base Effects at Play
Food inflation rose to 2.1% in January 2026, coming in higher than estimates based on the earlier series. Sequentially, the seasonal decline in food prices was just 0.04%, lower than the historical winter average decline of 1.4% (based on the 2011-12 series).
The report highlighted three key factors:
- A low base effect pushing up January 2026 numbers.
- Limited further slowdown after sustained price corrections through 2025.
- Basket weight adjustments increasing the share of meat, fish, fruits, and nuts.
Inflation in meat (8.5%), fish (6.7%), and fruits and nuts (7.9%) remained elevated, while vegetables and pulses declined 5.3% year-on-year.
Core Inflation Moderates to 3.4%
Core inflation eased to 3.4% in January 2026, compared to over 4% under the old tracking (4.7% in December 2025).
This moderation is partly attributed to a lower weight for gold in the revised basket. Gold, along with diamond and platinum jewellery, now accounts for 0.62% of the index, down from gold’s 1.08% share earlier—significant given the impact of elevated gold prices on FY26 core inflation.
Housing inflation, recalibrated under the new methodology by removing employer-provided rent and extending coverage to rural areas, remained moderate at 2.1%.
“The overall core inflation prints signals that underlying inflationary pressures remain moderate,” the report observed.
Structural Changes in the New CPI Series
The updated CPI series shifts the base year to 2023-24 from 2011-12 and expands the basket to 354 items. Notably:
- Food and beverages weight declines to 36.75% from 42.61%.
- Core weight (excluding food & beverages, fuel & light, pan & tobacco) rises to 54.9%, versus 48.2% earlier.
- A new segment—“restaurants and accommodation services”—has been introduced, previously classified under food and recreation categories.
Back data is currently available only at the headline level, limiting granular comparative analysis.
Inflation Snapshot – January 2026 (% y-o-y)
- Headline CPI: 2.8
- Core CPI: 3.4
- Food & Beverages: 2.1
- Housing: 2.1
- Fuel: 0.4
- Education Services: 3.4
- Restaurants & Accommodation Services: 2.9
- Personal Care & Miscellaneous: 19.0
