New CPI series marks retail inflation at 2.75%
Context: The Ministry of Statistics and Programme Implementation (MoSPI) released the Consumer Price Index (CPI) data based on a new series with 2024 as base year, placing retail inflation in January 2026 at 2.75%.
- The new series of the CPI, which updated the base year from 2012.
- The total number of items covered under the new series has increased to 358 from the 299 items in the older series.
- The number of goods covered under the new series has increased to 308 from 259, and the number of services has gone up to 50 from 40.
- The updated CPI series gives new weights to goods and services based on consumption patterns revealed in the Household Consumption Expenditure Survey (HCES) 2023-24.
- The new series also collects data from more sources across the country. Data are collected from 1,465 rural markets, up from 1,181. The number of urban markets covered has gone up to 1,395 from 1,114. Notably, the new series also collects data from 12 online marketplaces, a new category that has been included now.
- The new series of the CPI provides more granular data by dividing the underlying goods and services into 12 broad groups compared to the six groups under the older series. As a result of this, and also based on the consumption patterns of the HCES 2023-24, the weights assigned to these goods and services have also been revised to better reflect current consumption.
New weights
- The weightage assigned to the food and beverages category has been revised downward in the new series to 36.75% from the earlier 45.86%.
- “The lower weightage on the relatively volatile food category may make the headline inflation number less volatile, all other things remaining equal,”.
- The housing category, with an earlier weight of 10.07%, has been expanded to also include water, electricity, gas and other fuels, and this combined category now has a weight of 17.67%.
- The additional groups in the new series include furnishings, household equipment and routine household maintenance (with a weight of 4.47%), health (6.1%), transport (8.8%), information and communication (3.61%), recreation, sports and culture (1.52%), education services (3.33%), restaurants and accommodation services (3.35%), and personal care, social protection and miscellaneous goods and services (5.04%).
- The paan, tobacco and intoxicants category saw its weight increase to 2.99% from 2.38% in the older series.
- The clothing and footwear category’s weight fell to 2.38% from 6.53%.
“Since the basket is aligned with recent expenditure data, the inflation signals from this will be more closely matched to the prevailing economic conditions,”.
Source: TH