Headline inflation will likely become less volatile under the new consumer price index (CPI) series, Chief Economic Advisor Dr V Anantha Nageswaran said, as lower weightage for the volatile food and beverages category reduces its impact on overall figures—all other variables remaining constant.
“Inflation could now become more driven by core rather than food,” Nageswaran noted, suggesting monetary policy can focus more effectively on aggregate demand pressures rather than using interest rates, a demand-side tool, to tackle supply-induced price shocks.
Nageswaran made the remarks at a press conference on Thursday unveiling the new CPI series with a revised base year.
The recalibration stems from reduced weightage for the volatile food and beverages category, which will make headline inflation less erratic.
However, Ministry of Statistics and Programme Implementation (MoSPI) Secretary Dr Saurabh Garg, speaking at the same event, declined to prescribe a single definition of core inflation leaving it to individual organisations—the Reserve Bank of India or Ministry of Finance—to determine their preferred core inflation measures. “RBI will now have the flexibility to look at it at a granular level and decide what items they want to include in core inflation,” he added.
Also Read: Inflation at 2.75 percent under the new CPI base
Nageswaran also said that lower CPI volatility would stabilise government expenditures tied to the index, such as dearness allowance payments and inflation-indexed bonds, improving budget predictability and giving policymakers clearer visibility into fiscal projections.
Meanwhile, the inclusion of rural rents in the new series not only removes an urban bias, but also enhances poverty estimates since real income calculations depend directly on CPI.
“Improved cost of living measurements also enhance the targeting efficiency of welfare schemes ensuring that benefits, subsidies and social transfers are better aligned with actual regional price realities,” Nageswaran said.
The updated weights, broader coverage, and enhanced data collection methods showcase the country’s capacity to systematically modernise its core statistical infrastructure and “reinforces institutional credibility in generating reliable macroeconomic data,” he added.
Nageswaran also said that with services items expanding from 40 to 50 in the index, the new series better captures India’s evolving economic structure where services command a rising share of activity and employment. He said that the new series also recognises the growing role of digital channels in price formation.
India’s retail inflation stood at 2.75 percent in January, according to new government data based on the revised CPI series with 2024 as the base year.
Food inflation stood at 2.13 percent for the month, while the personal care, social protection and miscellaneous category recorded the highest inflation at 19.02 percent, driven primarily by rising prices of gold, silver, diamond and platinum jewellery.
The MoSPI Secretary announced the next Household Consumption Expenditure Survey will be conducted in 2027-28, with plans to revise the CPI base year every five years in line with international standards.
First Published: Feb 13, 2026, 11:14
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