India’s consumer inflation gauge is set for a major overhaul after a decade, with the new Consumer Price Index (CPI) series adopting 2024 as the base year and significantly expanding market coverage, item basket composition and data collection methods to better reflect changing consumption patterns and the digitalisation of the economy.
The current CPI series with base 2012 was launched in January 2015, with index data from January 2013 and inflation readings from January 2014.
Beyond guiding the Reserve Bank of India’s monetary policy, CPI is widely used as a proxy for cost-of-living changes and for indexing wages, pensions and welfare benefits, making the rebasing exercise critical for policy decisions.
An outdated base year was among the key factors cited by the International Monetary Fund in grading India’s national accounts at level C in a report released in November 2025, reinforcing the need to refresh statistical frameworks to reflect structural shifts in household spending.
Shifting weights
According to the recommendations of the expert group set up to review the current CPI structure, the new series is expected to assign a lower weight to food and beverages at 36.75 per cent compared with 45.86 per cent at present. The change is significant given the high volatility of food prices and their outsized influence on headline inflation. Weights for core categories, including transport, information and communication, health, and household goods and services, are proposed to be raised, mirroring the steady rise in non-food consumption.
“By applying the new weights to the unchanged indices, we find that the overall CPI could be marginally higher by 20–30 basis points. In months when food inflation is elevated, the new CPI would likely print 20–30 basis points lower,” said Soumya Kanti Ghosh, group chief economic adviser at SBI, indicating potential implications for near-term inflation readings.
Wider base
The revised CPI series is expected to source prices from 1,465 rural and 1,395 urban markets across 434 towns, expanding geographical coverage. The basket will increase to 358 weighted items from 299, with goods rising to 314 and services to 50, capturing a broader consumption mix.
The series will formally integrate weekly price tracking from 12 major online markets in large cities (including Calcutta), reflecting the growing role of e-commerce. Telecom services and online media subscriptions, including OTT platforms, and international air fares will also be tracked in the new series.
Adoption of the UN’s COICOP (Classification of Individual Consumption According to Purpose) 2018 framework is expected to bolster global comparability and investor confidence.
