New base, reworked weights: Retail inflation at 2.8% in January

NEW DELHI: Retail inflation was at 2.8% in Jan, the first print under the new data series which was released on Thursday with several new additions and weightage of food being reduced.

The base year in the new series has been upgraded to 2024 from the current 2012 and uses the household consumption survey 2023-24 data to better capture the changing consumption pattern in the country. The data released by the National Statistics Office (NSO) showed retail inflation, as measured by the consumer price index (CPI), was at 2.8% in Jan under the new series. Food inflation in Jan was estimated at 2.1%. Rural inflation was marginally lower at 2.7% compared to urban which was at 2.8%. In Dec 2025, retail inflation was at 1.3% under the old series. Personal care, social protection and miscellaneous goods, which include gold and silver jewellery, surged 19% in Jan. The data also showed silver jewellery inflation soared nearly 160% during the month.

The most visible change in the new series is the reduction in the weight of food and beverages to around 37% from the previous 46%. The data captures the declining food share in household expenditure, importance of housing, services, and transport-related items and is better aligned with current consumption behaviour. High weight of food in the 2012 series had often led to volatility in the retail inflation numbers, prompting some policymakers to call for a revision. Food still remains the largest component in the new series.

The number of items has increased from 299 to 358 under the new series. Goods items have increased from 259 to 308 while services rose from 40 to 50. The statistics office said this expansion strengthens the representation of the services sector, which has assumed greater importance in household expenditure over time.

For the first-time, rural house rent has been included to improve coverage of rural housing consumption while there is “strengthened representation of modern consumption items such as online media services and fuels like CNG and PNG”.

Coverage of data available on digital and administrative sources, including telephone charges, rail fare, air fare, fuel, postal charges and online media and streaming services (OTT subscriptions) has been improved, the statistics office said. “Our preliminary assessment is that the expected uptick (as per old series) in CPI inflation in FY2027 relative to FY2026 was largely anticipated to be driven by food and beverages segment. With a somewhat lower weight for F&B in the new series vis-àvis the old series, the expected base-effect led uptick in the headline print in FY2027 would likely be tempered,” said Aditi Nayar, chief economist at ratings agency Icra.