New Basket, Same Inflation Story? The Math Behind India’s CPI Reset

CPI Reset Explained  
The National Statistics Office has shifted the CPI base year from 2012 to 2024. The new basket incorporates lifestyle changes such as digital services, housing upgrades, and evolving consumption habits. Food and beverages now carry less weight, while services and core categories have gained prominence.  

Impact On Inflation Readings  
Lower food weights mean headline inflation could appear less volatile. However, the stronger role of services highlights persistent pressures in healthcare, education, and housing. January 2026 retail inflation was recorded at 2.75 percent under the new series, reflecting the recalibrated methodology.  

Policy Implications  
Economists believe the reset improves accuracy but does not fundamentally change the inflation narrative. The Reserve Bank of India will continue to monitor both headline and core inflation, ensuring monetary policy remains aligned with real consumption trends.  

Key Highlights  

• CPI base year shifted from 2012 to 2024  
• Food weights reduced, services expanded  
• Digital and lifestyle spending included in basket  
• January 2026 retail inflation at 2.75 percent  
• Policy focus remains on core inflation pressures  

Conclusion  
India’s CPI reset modernizes the inflation gauge, aligning it with evolving household habits. While the new basket smooths headline numbers, the underlying inflation story remains intact, keeping policymakers alert to long-term price stability.  

Sources: Mint, Business Standard, Economic Times