January's CPI numbers from MoSPI came with a surprise: retail inflation was just 2.75%. That put it back inside the RBI's comfort band of 2% to 6% for the first time since August 2025.
The more interesting news sat in the fine print. MoSPI moved the base year of the index from 2012 to 2024, the first change since the 2012 series began in 2015, so prices are now weighed against how households spend today, as measured by the Household Consumption Expenditure Survey (HCES), instead of how they spent more than a decade ago.
What changed, and what did not
How prices are collected and how inflation is worked out stay the same. What changes is the basket: which items are in it, how much weight each one carries, and where prices come from. Prices now also come from 12 new online marketplaces, alongside physical shops.
Food matters less than it used to. Its weight fell from ~46% to ~37%. Housing, water, electricity, gas and other fuels now sit in one group at ~17.7%, close to the ~16.9% the 2 old groups added up to. With food counting for less and services for more, the index should jump less on a bad harvest, and come down more slowly once it rises, because core services sectors like rent and school fees rarely get cheaper.
The basket got a clear-out too. DVD, VCR and VCD players, radios, tape recorders and second-hand clothes are gone. OTT subscriptions, rural housing, pen drives and external hard disks are in.
What it means
Inflation is low, but not everywhere. Education (3.35%) and restaurants and hotels (2.87%) are rising faster than the headline (2.75%), while transport barely moved (0.09%).
Why this matters: the part of the basket that is hardest to bring down is still running warm, so a low headline number alone does not give the RBI much room to cut rates quickly. And with rent and wages now carrying more weight, and online prices feeding in, the index should show turns in inflation sooner than it used to.
Sources
Every figure comes from MoSPI's CPI releases and the official inflation target.
Official releases
- MoSPI, First press release of Consumer Price Index on base 2024=100, January 2026, 12 February 2026
- MoSPI, Consumer Price Index on base 2012=100 for December 2025, 12 January 2026
Methodology
- MoSPI, Expert Group Report on Comprehensive Updation of Consumer Price Index, January 2026
- MoSPI, Press note on release of the Expert Group Report on CPI, February 2026
Inflation target