Retail inflation rises to 2.75% in January in first reading under revamped CPI

India’s retail inflation climbed to 2.75% in January, the first official reading under a thoroughly revised Consumer Price Index (CPI), data released on Thursday showed.

That inflation print came in above the 2.4% median market forecast but remained comfortably within the Reserve Bank of India’s 2–6% tolerance band.

The updated CPI, which shifts the base year to 2024 and expands the consumption basket, reflects changing household spending patterns with greater weight on services and housing and reduced emphasis on volatile food prices.

The overhaul draws on the latest Household Consumption Expenditure Survey, recalibrating rural and urban weights and incorporating newer service and digital consumption categories to better mirror current spending patterns.

Economists said the headline print showed inflation remaining subdued even as methodological changes lifted the reading.

“Inflation remains below 3% for January, suggesting overall price pressures are still contained,” said Sujan Hajra, principal economist at Anand Rathi Group.

New CPI can cloud comparisons with past figures because the revamped index uses updated weights from the latest household consumption survey and includes more categories such as digital services and rural house rent.

That tends to smooth headline volatility and deliver a figure that may not be directly comparable with the older series.

Food inflation, a key driver of headline volatility in the past, moderated under the new structure, while other segments such as services and housing exerted a stabilizing influence on the overall reading.

The inflation backdrop, benign though not weaker than expected, reinforces expectations that the RBI will maintain its policy rates on hold at the current levels, with limited immediate pressure to cut or tighten.