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Informist, Tuesday, Feb. 10, 2026

 

By Shubham Rana

 

MUMBAI – Retail inflation in India likely rose in January mainly because of higher gold prices, with the new Consumer Price Index expected to show inflation at 2.8%, according to an Informist Poll. At 2.8%, CPI inflation would move back inside the Reserve Bank of India's tolerance range of 2-6% for the first time since August.

 

Retail inflation was at 1.33% in December, based on the previous CPI series, which has 2012 as the base year. Based on the old series, retail inflation in January is expected to be 2.5%, according to a separate Informist poll. January will be the first month for which the statistics ministry will release retail inflation data--due 1600 IST Thursday--based on the new CPI series with 2024 as the base year.

 

The new CPI series will mark a substantial change in how price changes are captured, with revised weights derived from the Household Consumption Expenditure Survey 2023–24 (Aug-Jul), some items added and some removed, and updated methodologies. In the new CPI series, the item basket will comprise 358 items against 299 in the previous series.

 

"Given the expanded coverage and several methodological changes, it is difficult to preempt the directional change in CPI inflation when moving from the old to the new series," ANZ Banking Group said in a report. "Notably, the weight of food and beverages will be reduced to around 37%, which implies that core inflation will exert a greater influence on the headline print."

 

The weightage of 'food and beverages' will fall to 36.8% in the 2024 series from 45.9% in the old series. Lower weights of food items in the new CPI series are likely to push up food inflation, which was (-)2.71% in December. According to data from the Department of Consumer Affairs, retail prices of onions rose 4% on month in January while prices of tomatoes and potatoes were down 7% and 8%, respectively.

 

Headline inflation is also seen rising in January based on the new series because of higher core inflation, economists said. The weights of non-food and non-fuel items, or items that make up core inflation, will increase in the 2024 CPI series. Economists said the weight for core inflation would now be around 55-57%, up sharply from 47% in the old series.

 

Core inflation has risen in recent months on the back of higher gold and silver prices. It is expected to increase further as weights of non-food and non-fuel items rise in the new series. Core inflation--which excludes food and fuel items--rose to a 28-month high of 4.6% in December, driven largely by a surge in gold and silver prices. Gold inflation hit a record 68.7% while silver inflation jumped 97.1% in January.

 

"While the weights for the new series are out, we still don't know the indices for several items that are being included for the first time in the CPI," Gaura Sen Gupta, chief economist at IDFC FIRST Bank said, referring to the base prices of the newly-added items on which inflation will be calculated. "Inflation for January may not rise in the new series as much as some fear because of the several unknowns such as the inclusion of rural housing, which may keep housing inflation in check," Sen Gupta told Informist.

 

The RBI last week raised its CPI inflation forecast for the March quarter by 30 basis points to 3.2?cause of an unfavourable base effect. The central bank also raised the inflation forecast for the financial year 2025-26 (Apr-Mar) to 2.1% from 2.0?rlier. Excluding precious metals, the underlying inflation pressures remain muted, RBI Governor Sanjay Malhotra said Friday. The RBI deferred giving projections for inflation for FY27 till April in view of the impending new CPI series.

 

The following is a summary of estimates for CPI inflation in January based on the weights of the new CPI series:

 

ORGANISATION	CPI INFLATION ESTIMATE
Union Bank of India	2.59%
Sunidhi Securities	2.78%
Nomura	2.8%
Kotak Mahindra Bank	2.8%
QuantEco Research	2.9%
ICICI Bank	2.96%

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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