How India measures inflation: the new CPI series explained

What does the Consumer Price Index measure?

The Consumer Price Index (CPI) tracks how the prices of a fixed basket of goods and services bought by households change over time. Retail inflation, the figure in the headlines each month, is the percentage change in the index compared with the same month a year earlier.

The National Statistics Office (NSO), part of the Ministry of Statistics and Programme Implementation (MoSPI), publishes separate indices for rural India, urban India and the country as a whole. The all-India combined figure is the one the Reserve Bank of India targets.

Why did MoSPI change the series?

Because the old basket, based on spending patterns from more than a decade ago, no longer matched how Indians spend. MoSPI said the revision was needed to reflect structural changes since 2012 in consumption, incomes, urbanisation, services and digital spending.

It also wanted the period used for the weights (2023-24) to sit closer to the price reference year (2024), and to adopt the international COICOP 2018 classification so India’s data can be compared with other countries. An expert group that included the RBI, academics, ministries and statisticians advised on the revision.

What changed in the basket?

The basket now has 358 items, up from 299, with more services. Goods rose from 259 items to 308, and services from 40 to 50. The weights come from the Household Consumption Expenditure Survey 2023-24.

Items are grouped into 12 divisions, 43 groups, 92 classes and 162 subclasses under COICOP 2018. The old series used six broad groups. The new divisions separate out spending such as transport, information and communication, recreation, education, and restaurants and accommodation.

Food and beverages36.75%

Housing, water, electricity, gas, fuels17.67%

Transport8.80%

Clothing and footwear6.38%

Health6.10%

Personal care, social protection, misc.5.04%

Furnishings and household equipment4.47%

Information and communication3.61%

Restaurants and accommodation3.35%

Education services3.33%

Paan, tobacco and intoxicants2.99%

Recreation, sport and culture1.52%

0%25%50%

What the new CPI basket is made of. Division weights, all-India combined, base 2024 (%)

Item	Value
Food and beverages	36.75%
Housing, water, electricity, gas, fuels	17.67%
Transport	8.80%
Clothing and footwear	6.38%
Health	6.10%
Personal care, social protection, misc.	5.04%
Furnishings and household equipment	4.47%
Information and communication	3.61%
Restaurants and accommodation	3.35%
Education services	3.33%
Paan, tobacco and intoxicants	2.99%
Recreation, sport and culture	1.52%

How much does food count for now?

Food and beverages make up 36.75% of the new basket. Measured on the same classification, that is a clear drop. On the old 2012 grouping, food and beverages had a weight of 45.86%; the 2024 basket, regrouped the old way, gives them 40.10%.

The weight of transport rose from 6.39% to 8.80%, and that of housing, water, electricity and fuels from 16.89% to 17.67%, on the new classification. A smaller food weight means a bad harvest or a vegetable price spike moves the headline number less than before. Outlook Business reported in January that the change was expected to smooth inflation readings.

Old and new CPI at a glance

• 2024=100new base year (was 2012=100)
• 358items in the basket (was 299)
• 36.75%weight of food and beverages, new classification
• 12spending divisions (was 6 groups)

How are prices collected?

Field staff record prices on handheld devices in 1,407 urban markets, including online ones, and 1,465 villages across every state and union territory. The switch from paper forms to computer-assisted interviews came with the new series.

For the first time, e-commerce prices are collected as an extra market in 12 large towns with populations above 25 lakh, and online sources are used for airfares, streaming subscriptions and phone charges. Online prices are collected weekly. Some prices come from official records: rail fares from the Railways, postal charges from India Post, and retail prices of petrol, diesel, LPG, CNG and piped gas from the Petroleum Planning and Analysis Cell. Rural house rent is now included too.

Can I compare new figures with the old ones?

Not directly. The base year, the basket, the weights and the classification all changed, so a 4% reading on the new series is not the same measurement as 4% on the old one.

MoSPI has published new-series indices from January 2025, so year-on-year inflation on the new basis starts in January 2026. The last old-series reading was 1.33% for December 2025. The first new-series figure, for January 2026, was released at 2.75% and has since been finalised at 2.74%.

Why does this matter for interest rates?

The RBI’s inflation target is set in terms of this index. The government has set the target at 4% CPI inflation, with a band of 2% to 6%, for April 2026 to March 2031. The RBI’s Monetary Policy Committee sets the repo rate to keep inflation near that target.

In October 2026, as of the latest data, CPI inflation was 4.82% (August, provisional), and the RBI projected 5.2% for 2026-27. It raised the repo rate to 5.50% on 7 October.

When is the data released?

MoSPI publishes CPI data for each month in the middle of the following month. August 2026 data came out on 14 September, and September data is scheduled for 12 October 2026. Each month’s first figure is provisional and is finalised a month later.