India’s retail inflation edged higher in January 2026, climbing to 2.75% under the newly introduced Consumer Price Index (CPI) series. The latest data reflects a modest uptick compared to December 2025, driven by food price pressures and adjustments in the new CPI basket.
Key Highlights
- New CPI Series Impact: The government recently revised the CPI base year and basket composition to better capture evolving consumption patterns. This recalibration has slightly altered inflation readings compared to the old series.
- Food Inflation: Rising costs of vegetables, pulses, and cereals contributed significantly to the January increase, offsetting declines in fuel and housing categories.
- Core Inflation: Stripped of food and fuel, core inflation remained relatively stable, suggesting limited demand-side pressures.
- Policy Implications: With inflation still below the Reserve Bank of India’s upper tolerance band of 6%, monetary policy is expected to remain supportive of growth. However, policymakers will closely monitor food price trends in the coming months.
- Global Context: International commodity prices, particularly crude oil and edible oils, continue to influence India’s inflation trajectory, though recent moderation has provided some relief.
Economic Outlook
Economists believe that while inflation remains manageable, the upward trend in food prices could pose challenges if supply-side disruptions persist. The new CPI series is expected to provide a more accurate reflection of household consumption, aiding policymakers in framing targeted strategies.
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