CPI Base Year 2024: Retail Inflation at 2.75% as India Overhauls CPI Basket, GDP and IIP Series

India has entered a new phase in economic measurement. The Ministry of Statistics and Programme Implementation (MoSPI) has officially released the Consumer Price Index (CPI) Base Year 2024 series, marking a significant overhaul of how retail inflation is measured in the country. This release is part of a broader statistical modernization exercise that also includes the upcoming new GDP series (Base 2022–23) and Index of Industrial Production (IIP) series (Base 2022–23).

The release schedule announced by MoSPI is as follows:

• CPI Base Year 2024 – Released on 12 February 2026

• GDP Base 2022–23 series – Scheduled for 27 February 2026

• IIP Base 2022–23 series – Scheduled for May 2026

This comprehensive revision aims to enhance relevance, accuracy, international comparability, transparency, and methodological robustness of India’s official statistics.

CPI Base Year 2024: What It Means for India’s Inflation Measurement

The CPI Base Year 2024 is now the benchmark for measuring retail inflation in India. Retail inflation under this new series stood at:

• 2.75% (Provisional) in January 2026

• Rural inflation: 2.73%

• Urban inflation: 2.77%

This is the first inflation reading under the new series. Since it is the first data release, direct historical comparison with the older CPI 2012 series is not strictly appropriate. However, MoSPI has provided index values based on the new methodology going back to January 2025 and has also shared a linking factor to enable comparison back to 2013 in line with international practice.

What is CPI?

The Consumer Price Index (CPI) measures changes over time in the general retail prices of a basket of goods and services purchased by households for consumption.

A basket of goods and services refers to a representative set of commonly consumed items used to calculate price changes.

CPI in India is:

• Compiled every month

• Released for Rural, Urban, and Combined sectors

• Disseminated at state level under the new series

CPI is calculated using the Laspeyres Index Formula, which measures price changes using base year quantities as weights.

Laspeyres Index Formula Explained

The formula for calculating inflation is:

((CPIx+1−CPIx)/CPIx)×100((CPI_{x+1} - CPI_x)/CPI_x) \times 100((CPIx+1​−CPIx​)/CPIx​)×100

Where:

• CPIₓ = Value of CPI in the base year

• CPIₓ₊₁ = Value of CPI in the current month

The Laspeyres formula is based on:

• Base year price

• Base year weights

• Current month price

Base year weights refer to the relative importance assigned to items based on their share in total consumption expenditure during the base year.

Why Base Year Revision Was Necessary

MoSPI decided to undertake a comprehensive base year revision of:

• Gross Domestic Product (GDP)

• Index of Industrial Production (IIP)

• Consumer Price Index (CPI)

The proposed new base year:

• GDP & IIP: 2022–23

• CPI: 2024

The revision includes:

• Methodological improvements

• Incorporation of new data sources

• Weight updation

• Latest survey integration

• Enhanced sampling design

• Increase in sample size

• Modification of survey instruments

• Revision in survey periodicity

The base year revision is guided by respective Technical Advisory Committees/Expert Groups comprising experts from academia, Central and State Governments, and the Reserve Bank of India (RBI).

Surveys Used in CPI Base Year 2024

The CPI Base Year 2024 revision draws heavily from:

• Periodic Labour Force Survey (PLFS)

• Household Consumption Expenditure Survey (HCES) 2023–24

• Annual Survey of Unincorporated Sector Enterprises (ASUSE)

The HCES 2023–24 provides comprehensive data on household expenditure patterns in both rural and urban India. The CPI basket and weights have been reconstituted based on this latest survey, replacing reliance on the older 2011–12 consumption data.

CPI Base Year 2024: Expansion of Basket from 299 to 358 Items

Under CPI 2012:

• 299 items

• 259 goods

• 40 services

Under CPI Base Year 2024:

• 358 items

• 308 goods

• 50 services

This reflects a broader and more modern consumption pattern.

Newly Added Items

New additions include:

• OTT subscriptions

• Rural house rent

• Value-added dairy products

• Pen drives

• Babysitting services

• Fitness equipment

• AirPods

• Online marketplace prices

Removed Items

• VCR/DVD players

• Tape recorders

• Audio cassettes

Obsolete items have been removed to reflect technological and consumption shifts.

Market Coverage Expanded Significantly

Under CPI Base Year 2024, data collection now covers:

• 1,465 rural markets (up from 1,181)

• 1,395 urban markets (up from 1,114)

• 12 online marketplaces (new category)

Online markets are included in cities with populations above 25 lakh.

This inclusion of digital commerce marks a structural modernization of inflation measurement.

Classification Reform: COICOP 2018

CPI 2012 followed COICOP 1999 classification with six broad groups:

• Food & Beverages

• Pan, tobacco & intoxicants

• Clothing & footwear

• Housing

• Fuel & light

• Miscellaneous

CPI Base Year 2024 adopts COICOP 2018, developed by the United Nations Statistics Division.

Under the revised framework:

• 12 Divisions

• 43 Groups

• 92 Classes

• 162 Subclasses

• 358 items at the final level

This enables:

• Classification based on usage

• Greater granularity

• Global comparability

• More detailed dissemination of inflation rates

Weight Revisions Under CPI Base Year 2024

Food & Beverages

• CPI 2012: 45.86%

• CPI 2024: 36.75%

The lower weight assigned to food may reduce headline inflation volatility.

This aligns with Engel’s Law, named after German economist Ernst Engel, which states that as household income rises, the proportion spent on food declines.

Housing Category

• Earlier weight: 10.07%

• Now expanded to include water, electricity, gas and other fuels

• New combined weight: 17.67%

Other Category Weights

• Furnishings & routine household maintenance: 4.47%

• Health: 6.1%

• Transport: 8.8%

• Information & communication: 3.61%

• Recreation, sports & culture: 1.52%

• Education services: 3.33%

• Restaurants & accommodation services: 3.35%

• Personal care & miscellaneous: 5.04%

• Paan, tobacco & intoxicants: increased to 2.99% (from 2.38%)

• Clothing & footwear: reduced to 2.38% (from 6.53%)

House Rent Index Reform

Under CPI 2012:

• Covered only urban areas

• Included employer-provided accommodation

• Only combined index disseminated at state level

Under CPI Base Year 2024:

• Covers both rural and urban areas

• Excludes employer-provided accommodation

• Disseminates Rural, Urban & Combined indices at state level

• Inflation data disseminated at state level

• Rural house rent included for first time

CPI Base Year 2024 and Monetary Policy

CPI inflation is the most important macroeconomic indicator in India because it directly influences policy decisions of the Reserve Bank of India.

The RBI has a legal mandate to target:

• 4% inflation

• With tolerance band of 2% to 6%

If inflation rises above 4% on a sustained basis, the RBI increases the repo rate (policy interest rate) to weaken demand and bring inflation down.

Improved CPI measurement enhances:

• Monetary policy calibration

• Fiscal policy alignment

• Welfare scheme targeting

• Regional inflation understanding

Inflation Comparison: Old vs New Series

Under the new CPI Base Year 2024:

• January 2026 inflation: 2.75%

Under the old CPI 2012 series:

• December 2025 inflation: 1.33%

However, direct comparison is not appropriate due to:

• Different consumption baskets

• Different item weights

• Different classification systems

• Methodological changes

MoSPI has provided a linking factor to bridge the two series.

Broader Reform: GDP & IIP Base Revision

GDP Base 2022–23

Scheduled for release on 27 February 2026, incorporating:

• New methodologies

• Updated datasets

• Structural economic adjustments

IIP Base 2022–23

Scheduled for release in May 2026.

The Index of Industrial Production (IIP) measures changes in industrial output across manufacturing, mining and electricity sectors.

Transparency & Data Governance Reforms

MoSPI has taken several steps to ensure accuracy and transparency:

1. Digital platforms with in-built validation mechanisms

2. Simultaneous data processing

3. Reduction in release time lag

4. Advance Release Calendar (ARC) published on MoSPI website

5. Launch of e-Sankhyiki portal

6. Public access to unit-level survey data

7. Regular stakeholder consultations

8. National Meta Data Structure (NMDS) circulated among ministries

The NMDS clarifies:

• Data sources

• Collection methods

• Dataset discoverability

Understanding Inflation: Beyond CPI

Inflation refers to the rate at which general price levels rise, reducing purchasing power.

Other measures include:

Wholesale Price Index (WPI)

Measures wholesale prices (not retail). CPI captures MRP inclusive of taxes.

GDP Deflator

GDP Deflator=(Nominal GDP/Real GDP)×100GDP\ Deflator = (Nominal\ GDP / Real\ GDP) \times 100GDP Deflator=(Nominal GDP/Real GDP)×100

It measures price changes of all domestically produced goods and services.

The Bigger Economic Context

Chief Economic Advisor V. Anantha Nageswaran described the CPI Base Year 2024 revision as an “important development,” noting that inflation signals will now better reflect prevailing economic conditions.

He highlighted that the Indian economy has undergone significant transformation in the last decade, including changes in:

• Consumption behaviour

• Market structures

• Household expenditure composition

The new CPI structure reflects these shifts.

A New Era of Economic Measurement

The CPI Base Year 2024 is more than a statistical update. It represents:

• A modernization of inflation measurement

• A reflection of digital and structural economic change

• Improved global comparability

• Enhanced policy precision

With the upcoming release of GDP Base 2022–23 and IIP Base 2022–23, India’s statistical framework is being realigned with contemporary realities.

As of now, retail inflation stands at 2.75% in January 2026 under CPI Base Year 2024, marking the beginning of a new benchmark in India’s macroeconomic reporting.

---

FAQs: CPI Base Year 2024

Q. What is CPI Base Year 2024?

Ans. CPI Base Year 2024 refers to the updated reference year (2024) used by the Ministry of Statistics and Programme Implementation (MoSPI) to measure changes in retail prices in India.

In simple terms:

• The year 2024 is assigned an index value of 100

• All future price changes are measured relative to 2024

The new CPI Base Year 2024 series was released on 12 February 2026.

Q. What was India’s retail inflation under CPI Base Year 2024?

Ans. Retail inflation for January 2026 under the new CPI Base Year 2024 stood at:

• 2.75% (Provisional)

• Rural inflation: 2.73%

• Urban inflation: 2.77%

This is the first inflation reading under the updated series.

Q. Why was the CPI base year changed from 2012 to 2024?

Ans. The base year was revised to reflect:

• Updated household consumption patterns

• Structural changes in the Indian economy

• Growth of digital markets

• New spending categories (OTT, rural rent, online purchases)

• Latest data from Household Consumption Expenditure Survey (HCES) 2023–24

Over time, consumption habits change. Updating the base year ensures inflation measurement reflects today’s economic reality rather than outdated patterns.

Q. What new items are included in CPI Base Year 2024?

Ans. The new CPI basket now includes 358 items (up from 299 earlier).

Newly added items include:

• OTT subscriptions

• Rural house rent

• Value-added dairy products

• Pen drives

• Babysitting services

• Fitness equipment

• AirPods

• Online marketplace prices

Obsolete items removed:

• VCR/DVD players

• Tape recorders

• Audio cassettes

Q. How many items are covered under CPI Base Year 2024?

Ans. Under:

• CPI 2012 → 299 items

• CPI Base Year 2024 → 358 items

Breakdown under CPI 2024:

• 308 goods

• 50 services

This broader coverage improves inflation measurement accuracy.

Q. What is the Laspeyres Index Formula used in CPI?

Ans. India calculates CPI using the Laspeyres Index Formula.

This method:

• Uses base year quantities (weights)

• Compares current prices with base year prices

Formula:

((CPIcurrent−CPIbase)/CPIbase)×100((CPI_{current} - CPI_{base})/CPI_{base}) \times 100((CPIcurrent​−CPIbase​)/CPIbase​)×100

It ensures that price changes are measured using consumption patterns of the base year.

Q. What is the weight of food in CPI Base Year 2024?

Ans. Under:

• CPI 2012 → Food weight was 45.86%

• CPI 2024 → Food weight reduced to 36.75%

This aligns with Engel’s Law, which states that as income rises, the proportion spent on food declines.

Lower food weight may reduce overall inflation volatility.

Q. Does CPI Base Year 2024 include online marketplaces?

Ans. Yes. For the first time, CPI Base Year 2024 includes prices from:

• 12 online marketplaces

• In cities with population above 25 lakh

This reflects the growing role of digital commerce in India.

Q. What is COICOP 2018 and why is it important?

Ans. CPI Base Year 2024 follows COICOP 2018 (Classification of Individual Consumption According to Purpose) developed by the United Nations Statistics Division.

It provides:

• 12 divisions

• 43 groups

• 92 classes

• 162 subclasses

• 358 items

This ensures:

• Better classification of consumption

• International comparability

• More granular inflation data

Q. What is the difference between CPI and WPI?

Ans. CPI (Consumer Price Index)Measures retail prices paid by consumers (includes taxes and MRP).

WPI (Wholesale Price Index)Measures price changes at the wholesale level (before retail margins).

CPI is more relevant for household inflation and RBI policy decisions.

Q. What is the GDP Deflator?

Ans. The GDP Deflator measures price changes of all domestically produced goods and services.

Formula:

GDP Deflator=(Nominal GDP/Real GDP)×100GDP\ Deflator = (Nominal\ GDP / Real\ GDP) \times 100GDP Deflator=(Nominal GDP/Real GDP)×100

Nominal GDP = Current pricesReal GDP = Base year prices

It is broader than CPI because it covers the entire economy.