Centre will also cut the weight of food and beverages to 36.75 per cent in the new consumer price index (CPI) series from 45.86 per cent currently
Given the statistical low-base effect on food inflation, a report by Crisil Intelligence has stated that the inflation is set to rise in the next financial year. However, softer global commodity prices will help keep inflation within the Reserve Bank of India’s (RBI’s) target band of 2 to 6 per cent.
The report noted that the impact of Goods and Services Tax (GST) rationalisation will extend into the first half of the next fiscal. The government aims to bring down the fiscal deficit via lower revenue spending as a percentage of gross domestic product, while the capital expenditure is maintained.
“Growth to normalise due to a challenging global trade environment, mildly lower fiscal impulse and waning support from statistical factors such as a low deflator. That said, growth will remain slightly above its decadal trend, driven by healthy consumption and sustained government capex,” the report pointed out.
As food prices are more volatile, rural inflation across the states has shown greater volatility than inflation in urban areas, the Economic Survey 2025-26 highlighted. Throughout much of 2023 and 2024, rural inflation remained above urban inflation, reflecting differences in consumption weights across rural and urban baskets.
In contrast to headline inflation, core inflation in rural and urban areas follows a smoother and more gradual adjustment path, declining steadily through 2023 and early 2024 before stabilising within a relatively narrow range thereafter.
Aimed at making the headline inflation readings less volatile and provide more balanced outlook for monetary policy, Centre will cut the weight of food and beverages to 36.75 per cent in the new consumer price index (CPI) series from 45.86 per cent currently.
The new CPI series, with the base year 2024, is scheduled to be released on 12 February. The first release will provide indices from January 2025 onwards and inflation data for January 2026. The weights in the new series are derived from the Household Consumption Expenditure Survey (HCES) 2023-24.
