New inflation series has been introduced to ensure that the index remains representative of current household consumption patterns, price structures and the evolving nature of the Indian economy
With India revising base year from 2012 to 2024 using Household Consumption Expenditure Survey (HCES) 2023-24, the retail inflation for January 2026 is reported at 2.75 per cent on a year-on-year basis. Corresponding inflation rates for rural and urban are 2.73 per cent and 2.77 per cent, respectively.
Food Inflation stood at 2.13 per cent on a year-on-year basis during the month. Data from the Ministry of Statistics and Programme Implementation (MoSPI) revealed that the corresponding inflation rates for rural and urban are 1.96 per cent and 2.44 per cent, respectively. Retail inflation for December 2025 at 2012 base stood at 1.33 per cent.
“The CPI inflation came in line with expectations. While details are still awaited the core inflation looks significantly lower than our expectations. While inflation trajectory remains fairly benign, we believe RBI’s rate cutting cycle has come to an end, with the RBI likely to continue to hold rates on pause for an extended period through CY26 at least,” stated Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.
Division-wise inflation rate
Year-on-year Housing inflation rate for January 2026 is 2.05 per cent and the corresponding inflation rates for rural and urban are 2.39 per cent and 1.92 per cent, respectively. On the national level division wise inflation rate front, the food and beverages (F&B) inflation stood at 2.11 per cent, while pan, tobacco and intoxicants inflation was 2.86 per cent.
Inflation rate for clothing and footwear was reported at 2.98 per cent, while personal care, social protection and miscellaneous goods topped the chart with 19.02 per cent rate, data from MoSPI revealed. Inflation in silver jewellery was reported at 159.67 per cent, followed by tomato at 64.8 per cent.
When it comes to items with low inflation at all India combined level in January, inflation in garlic was reported at -53.05 per cent, followed by onion at -29.27 per cent. Centre added that inflation potato took the third spot with -28.98 per cent inflation rate during the month.
Telangana recorded the highest rate of inflation at 4.92 per cent in January 2026, followed by Kerala at 3.67 per cent. Inflation in Tamil Nadu was reported at 3.36 per cent. During the month of January, 2026, prices were collected from 100 per cent rural and urban markets while the market-wise prices reported therein were 100 per cent for rural markets and 99.98 per cent for urban markets.
“Looking ahead, improved data quality and supply-side management is a win-win for industry and macroeconomic stability. Though CPI witnessed an increase in January, 2026, the inflation is well within the target range for RBI threshold,” noted Rajeev Juneja, President, PHD Chamber of Commerce and Industry (PHDCCI).
New Base Year
The Consumer Price Index (CPI) series with base year 2024=100 has been introduced to ensure that the index remains representative of current household consumption patterns, price structures, and the evolving nature of the Indian economy. An expert group on base revision of CPI was constituted with representation from the Reserve Bank of India, academia, line ministries and statistical experts.
In CPI 2024, expenditure weights are derived from HCES 2023-24, while base-period prices were collected during January 2024 to December 2024. At the all-India level, the number of weighted items has increased from 299 to 358 in CPI 2024. Within this, goods items are increased from 259 to 308 and services items are increased from 40 to 50.
“We do not expect the new inflation series to meaningfully influence policy decisions in the near term, with an extended rate pause likely, supported by a positive cyclical upswing and confidence effects stemming from the successful conclusion of US-India trade negotiations,” highlighted Radhika Rao, Executive Director and Senior Economist, DBS Bank.
The new series includes the first-time inclusion of rural house rent for improving coverage of rural housing consumption. It also consists of strengthened representation of modern consumption items such as online media services and fuels.
Adoption Of International COICOP – 2018 Framework
The CPI 2024 series adopts the Classification of Individual Consumption According to Purpose (COICOP) 2018, replacing the earlier structure comprising six broad groups. This is the latest classification system developed by United Nations Statistics Division.
Under the revised framework, expenditure is classified into 12 divisions at the first level, 43 groups, 92 classes, 162 subclasses enabling and 358 items at last level of hierarchy. CPI 2024 series covers 1,465 rural markets and 1,395 urban markets across 434 towns. In addition, 12 online markets are covered across 12 towns having a population of more than 25 lakh.
In the revised CPI series, the housing index is compiled using a weighted average of three constituent groups, namely actual rental payments for housing, maintenance, repair and security of the dwelling, and water supply and other miscellaneous services relating to the dwelling.
