New CPI Series Sets Inflation at 2.75%

Why in the News?

The Ministry of Statistics and Programme Implementation (MoSPI) released the revised Consumer Price Index (CPI) with 2024 as the new base year, placing retail inflation at 2.75% for January 2026, reflecting updated consumption trends from HCES 2023–24. This revision has implications for the foreign policy, economic diplomacy, and international trade relations, influencing strategic partnerships and bilateral relations.

Key Features of the New CPI Series:

• The base year has been revised from 2012 to 2024, aligning inflation measurement with recent economic realities and global economic integration trends.
• Retail inflation for January 2026 stands at 2.75% under the new methodology, a figure closely watched by foreign investors and trade partners as part of economic statecraft.
• Total items in the CPI basket increased from 299 to 358, improving representativeness and reflecting changes in consumer behavior influenced by international trade patterns and supply chain resilience.
• Goods covered rose from 259 to 308, while services increased from 40 to 50, indicating a shift towards a more service-oriented economy in line with global trends and trade diplomacy.
• The CPI classification expanded from 6 broad groups to 12 groups, allowing more granular tracking and better alignment with international economic indicators.

Changes in Weights and Coverage

• The weight of food and beverages declined significantly from 45.86% to 36.75%, reducing food’s dominance in headline inflation and potentially impacting agricultural trade policies and bilateral relations.
• The housing category now includes water, electricity, gas and other fuels, raising its weight to 17.67% from 10.07%, reflecting the growing importance of energy security in economic planning.
• Paan, tobacco and intoxicants weight increased to 2.99%, while clothing and footwear declined to 2.38%, indicating shifting consumer priorities that may influence trade diplomacy and bilateral trade agreements.
• Market coverage expanded: rural markets increased from 1,181 to 1,465, urban from 1,114 to 1,395, enhancing the index’s representativeness across diverse economic zones.
• For the first time, data from 12 online platforms has been incorporated, reflecting digital consumption growth and the increasing role of technology transfer in shaping consumer behavior and supply chain resilience.