India's retail inflation, measured by the Consumer Price Index (CPI) , touched an eight-month high in January, increasing to 2.75%, revealed data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Thursday. This is the first time the ministry has released the inflation figure under the new series of the CPI, where they have changed the base year to 2024.
After touching a record low of 0.25%, it has increased marginally to 0.71% in November, before crossing 1% by the end of the year. Food inflation stood at 2.13% and that of housing at 2.05%.
Despite the increase over the last few months, the headline inflation still managed to remain much below the RBI’s tolerable band between 2-6%. The spike in the retail inflation has been mainly due to the adjustment in the base year, alongside the other changes made in the methodology. Personal care, social protection and miscellaneous goods and services inflation stood at 19.02%.
“The CPI basket now includes 358 weighted items, up from 299 earlier. Goods items have increased from 259 to 308 and services from 40 to 50, reflecting changing consumption patterns. New inclusions include rural house rent, OTT services, international air travel, and newer energy sources such as CNG and PNG," said Dr Saurabh Garg, Secretary, MoSPI, in an exclusive interaction with TNIE.
"Items have also been regrouped to align with COICOP 2018. MoSPI will not publish core and non-core inflation. Instead, it will release granular item-level data and weights, allowing users, including the RBI, to construct their own measures,” he added.
MoSPI has announced changes to the composition of the inflation basket, sharply reducing the weight of food and beverages—from 54% to 37%—often blamed for volatility in headline inflation.
Services items have been increased from 40 to 50. “This expansion strengthens the representation of the services sector, which has assumed greater importance in household expenditure over time,” said MosPI.