India’s retail inflation at 2.75% in January: What changed in the new CPI basket and why it matters

India’s retail inflation stood at 2.75% in January 2026, according to the first release of the Consumer Price Index (CPI) with base year 2024. The revised series, released by the National Statistics Office (NSO) on February 12, 2026, highlights updated consumption patterns, expanded coverage, and growing digital spending in household budgets. 

“Corresponding inflation rates for rural and urban areas are 2.73% and 2.77%, respectively,” the official release said.

Under the old series (base year 2012), retail inflation was 4.26% in January 2025 and 1.33% in December 2025.

In the new series released by the NSO under the Ministry of Statistics & Programme Implementation, the number of goods has been increased to 308 from 259, while services have risen to 50 from 40.

Food inflation for January stands at 2.13%. “Corresponding inflation rates for rural and urban areas are 1.96% and 2.44%, respectively,” the release added.

Housing inflation stands at 2.05%, with rural and urban rates at 2.39% and 1.92%, respectively.

The CPI index level stood at 104.46 for January 2026 under the new base year, compared with 101.67 in January 2025. 

Among major states (population over 50 lakh), Telangana had the highest combined inflation rate in January 2026 at 4.92%. Kerala, Tamil Nadu, Rajasthan and Karnataka followed with 3.67%, 3.36%, 3.17% and 2.99%, respectively. 

“We do not expect the new inflation series to materially influence policy in the near term. An extended rate pause looks likely, underpinned by a cyclical upturn in both growth and inflation and improving confidence following the conclusion of the US–India trade negotiations,” said Madhavi Arora, Chief Economist, Emkay Global Financial Services. 

Items with the highest inflation in January

Under the new series of All India Consumer Price Index (CPI), the top item with the highest inflation rate in January 2026 is silver jewellery with a rate of 159.67%. Here are the top 5 items:

On the other hand, garlic recorded the lowest inflation at -53.05%.

What the reset means

The government has changed the reference year used to compare prices to get a more accurate picture of inflation. For example, if a burger cost ₹100 in 2012 and costs ₹250 today, the increase in price would be 150%, while if a burger’s price was ₹200 in 2024, it would be 25%. 

When the base year changes, the basket of goods and services and their spending weights are updated to reflect new consumption habits, resulting in a more accurate measure of inflation.

The new CPI reflects modern spending patterns by updating the list of goods and services. The earlier CPI did not fully capture digital spending, such as OTT subscriptions and online services.

What is included in the new CPI basket

  In CPI 2024, here are the categories and weights:

Note: Weights indicate how important each category is in calculating overall inflation. The weights are decided on the basis of how much people spend on it. For example, since food has the highest weight, a 10% rise in food prices impacts overall inflation more than a 10% rise in education prices.

New additions in CPI 2024

Here are the newly included items in the CPI 2024 to reflect modern consumption:

• Rural house rent
• Online streaming services (OTT)
• CNG and PNG fuels
• Value-added dairy products
• Pen drives
• Exercise equipment
• Babysitter services

Some outdated items, such as VCR/DVD players, radios, tape recorders, second-hand clothing, and CDs, have been removed. Further, the coverage of telephone charges, rail and air travel costs, online services and postal charges has been expanded. 

The CPI base revision represents a major overhaul and is expected to better reflect modern spending patterns in the country.