January Retail Inflation Stands at 2.75%; Insights on the New CPI Series
Retail inflation in India has been reported at 2.75% for January 2026, according to the newly released Consumer Price Index (CPI) series, which uses a base year of 2024. This marks a slight increase from the previous year’s inflation rate of 2.73% for rural areas and 2.77% for urban areas. The new CPI series, launched by the Ministry of Statistics and Programme Implementation (MoSPI), aims to provide a more accurate reflection of current consumption patterns and includes a broader range of items in its calculations.
Details of Inflation Rates
The provisional year-on-year inflation rate for January 2026 stands at 2.75%, as reported by the government. This figure is derived from the All India CPI, which now uses the base year 2024. The inflation rates are differentiated between rural and urban areas, with rural inflation recorded at 2.73% and urban inflation slightly higher at 2.77%. Food inflation, measured by the Consumer Food Price Index (CFPI), is reported at 2.13%. Within this category, rural food inflation is at 1.96%, while urban food inflation is higher at 2.44%. Additionally, housing inflation for January 2026 is noted at 2.05%, with rural housing inflation at 2.39% and urban housing inflation at 1.92%. These figures provide insight into the cost of living and economic conditions across different regions.
Introduction of the New CPI Series
The Ministry of Statistics and Programme Implementation has introduced a new Consumer Price Index series, replacing the previous 2012 base year with a new base year of 2024. This updated series is designed to better reflect contemporary consumption patterns and improve the accuracy of inflation measurements. The new CPI framework is based on the Household Consumption Expenditure Survey conducted in 2023-24, which aims to enhance the coverage and representativeness of the inflation data. The revised CPI now includes 12 consumption divisions, expanding from the previous six groups, in accordance with the Classification of Individual Consumption According to Purpose (COICOP) 2018 framework. This change allows for more detailed data that can assist policymakers, businesses, and financial institutions in making informed decisions.
Changes in the CPI Basket
The updated CPI basket features a significant increase in the number of weighted items, rising from 299 to 358. This includes an increase in goods items from 259 to 308 and services items from 40 to 50. The new basket reflects the growing importance of services in household consumption. Notably, the revised CPI includes new items such as rural housing, online media and streaming services, value-added dairy products, and exercise equipment. Conversely, it has removed outdated items like VCR/VCD/DVD players and second-hand clothing. The introduction of rural house rent for the first time and enhanced coverage of modern consumption trends, such as cleaner fuels like CNG and PNG, are also significant updates in this new CPI series. These changes aim to provide a more accurate and relevant measure of inflation in today’s economy.
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