Retail Inflation at 2.75% in January; OTT and Online Shopping Added to New CPI Basket
India’s retail inflation stood at 2.75% in January 2026. The rise was mainly driven by higher food prices and an increase in the prices of precious metals such as gold and silver. From January 2026, inflation data is being calculated under the new Consumer Price Index (CPI) 2024 series.
The base year has been revised from 2012 to 2024, and the index is now based on the Household Consumption Expenditure Survey 2023–24. Under the old series, retail inflation in December 2025 was 1.33%. Despite the January rise, inflation has remained below the Reserve Bank of India’s 4% target for the past 12 months.
Reduced Weight of Food Items
In the new CPI basket, the weight of food items has been reduced. Food inflation in January 2026 was around 2.13%. The share of food items in CPI has been reduced to 36.75%, down from about 46% earlier. This means fluctuations in food prices will have a relatively smaller impact on overall inflation figures, potentially helping the RBI maintain price stability.
Changing Consumption Patterns
The new CPI series reflects changes in household spending patterns over the past decade. Household expenditure has nearly doubled. Spending on cereals such as rice and wheat has declined, while expenditure on fruits, vegetables, milk, meat, and fish has increased. These changes are visible in both rural and urban areas.
New Items Added, Old Items Removed
With the growing influence of technology, the new CPI basket now includes OTT services, online prices, mobile plans, airfare, and e-commerce data. Additional items added include rural housing, value-added dairy products, barley and its products, pen drives, external hard disks, caregivers, babysitters, and fitness equipment.
Items removed from the CPI basket include VCR/VCD/DVD players and rentals, radios, tape recorders, second-hand clothes, audio-video CDs/DVDs, and coir/rope products.
Expanded Data Coverage
The scope of data collection has been expanded. The CPI now covers 1,465 rural markets, 1,395 urban markets across 434 cities, and online markets in 12 major cities. Market prices are collected monthly, while online prices are gathered weekly. Data is now collected through tablet-based digital systems to improve accuracy.
Key Changes in CPI 2024 Series
The total number of items in the CPI basket has increased from 299 to 358, expanding coverage of both goods and services. Rural housing has been included with a weight of approximately 11.76%. Free government services are excluded, as CPI only measures expenses for which households actually pay.
The CPI measures changes in prices of goods and services purchased by households, and year-on-year changes in CPI determine the inflation rate. Policymakers and markets will closely monitor the new series to assess its impact on future inflation trends in India.