India’s retail inflation at 2.75% in January; housing, services gain weight as CPI base shifts to 2024

New Delhi: India’s retail inflation stood at 2.75% in January under the revised All India Consumer Price Index series that adopts 2024 as the new base year, according to provisional data released on Thursday.

The year-on-year inflation rate for January 2026, compared with January 2025, stood at 2.75%, with rural inflation at 2.73% and urban inflation slightly higher at 2.77%.

The updated CPI series, brought out by the National Statistics Office under the Ministry of Statistics and Programme Implementation, revises both the basket of goods and services and their weights to better align with current household consumption patterns.

What does changing the base year to 2024 mean?
The base year is the reference year against which current prices are compared to measure inflation. In simple terms, prices in the base year are treated as the benchmark. By shifting the base from 2012 to 2024, the government is updating this benchmark to reflect how households spend money today rather than how they did more than a decade ago. The revision is based on the Household Consumption Expenditure Survey 2023–24. This means:

Buying habits: The mix of goods and services in the inflation basket now mirrors current buying habits. At the all-India level, the number of weighted items has increased from 299 in the 2012 series to 358 in the 2024 series. Goods have risen from 259 to 308, and services from 40 to 50.

Weight: The importance or “weight” assigned to each item has been recalibrated based on present-day spending patterns. This expansion strengthens the representation of the services sector, which has assumed greater importance in household expenditure over time. The weight of food and beverages in the CPI basket has declined to 36.75% from 45.86% in the 2012 series. However, it remains the largest component.

New items: New products and services that have become common are included, while outdated items have been removed. New additions include rural housing, online streaming services, value-added dairy products, barley and its products, pen drives and external hard disks, attendants and babysitters, and exercise equipment. Items such as VCR, VCD and DVD players, hiring charges, radio, tape recorders, second-hand clothing, CD and DVD cassettes, and coir rope have been dropped. 

January inflation details

• Food inflation in January was 2.13%, while housing inflation stood at 2.05%.
• Headline inflation was 2.73% in rural areas and 2.77% in urban India.
• Under the old CPI series with 2012 as the base year, retail inflation was 4.26% in January 2025 and 1.33% in December.
• Items showing low inflation in January included garlic, onion, potato, arhar, tur dal and peas. On the other hand, silver jewellery, tomato, coconut copra, gold, diamond, platinum jewellery and coconut oil recorded higher inflation.