For this article:

13 Feb 2026·Source: The Indian Express
3 min
EconomyNEWS

Retail Inflation Drops to 2.75% in January Under New CPI Series

India's retail inflation eases to 2.75% in January with revised CPI data.

India's retail inflation has decreased to 2.75% in January, according to the revised Consumer Price Index (CPI) data series. This is a significant drop from the previous rate of 4.06% in the new CPI series. The weight of food and beverage items has been adjusted to 36.76% in the new series, compared to 45.86% in the old series. The new CPI series incorporates updated base year and methodologies for calculating inflation.

Key Facts

1.

Retail inflation decreased to 2.75% in January under the revised CPI data series.

2.

The previous inflation rate in the new CPI series was 4.06%.

3.

The weight of food and beverage items has been adjusted to 36.76% in the new series.

4.

The weight of food and beverage items was 45.86% in the old series.

UPSC Exam Angles

1.

GS Paper 3: Economy - Inflation, Monetary Policy

2.

Connects to syllabus topics like inflation measurement, role of RBI, fiscal policy

3.

Potential question types: Statement-based, analytical questions on inflation and its impact

Visual Insights

Key Inflation Figures - January 2026

Key statistics on retail inflation based on the new CPI series.

Retail Inflation (January 2026)
2.75%

Significant drop indicating potential easing of monetary policy.

Previous Retail Inflation
4.06%-1.31%

Shows the extent of decrease in retail inflation.

Weight of Food & Beverages (New CPI)
36.76%

Lower weightage compared to the old series.

More Information

Background

The Consumer Price Index (CPI) is a crucial economic indicator used to measure changes in the price level of a basket of goods and services consumed by households. It serves as a key tool for tracking inflation and making informed economic decisions. The first CPI in India was constructed during World War I by the Labour Bureau, primarily for industrial workers. Over time, the CPI methodology has evolved. The base year is periodically revised to reflect changing consumption patterns and incorporate new goods and services. The weightage of different items in the basket is also adjusted based on household expenditure surveys. These revisions are essential to ensure that the CPI accurately reflects the current economic reality. The current change in CPI series is one such revision. The Reserve Bank of India (RBI) uses the CPI as a primary indicator for formulating its monetary policy. By monitoring inflation trends, the RBI can adjust interest rates and other policy tools to maintain price stability. The Fiscal Responsibility and Budget Management (FRBM) Act also indirectly links to CPI, as high inflation can impact government's fiscal targets and debt management.

Latest Developments

In recent years, there has been increased focus on improving the accuracy and timeliness of economic data, including the CPI. The National Statistical Office (NSO) plays a crucial role in collecting and disseminating this data. The periodic revision of the CPI series is part of this effort to enhance data quality. There are ongoing debates about the appropriate methodology for calculating inflation and the ideal composition of the CPI basket. Different stakeholders, including economists, policymakers, and consumer groups, have varying perspectives on these issues. These debates often center on the relative weightage of food items, housing, and other essential goods and services. Looking ahead, it is expected that the CPI will continue to be a key indicator for monitoring economic performance and guiding policy decisions. The government has set targets for inflation control, and the RBI is committed to using its monetary policy tools to achieve these targets. Future revisions to the CPI series are likely as the economy evolves and consumption patterns change.

Frequently Asked Questions

1. What key facts about the recent retail inflation drop should I remember for the UPSC Prelims?

For the UPSC Prelims, remember that retail inflation dropped to 2.75% in January under the new CPI series. Also, note the change in weightage of food and beverage items from 45.86% in the old series to 36.76% in the new series.

Exam Tip

Focus on the percentage changes and the direction of the change (increase or decrease) in inflation. These are common areas for Prelims questions.

2. What is the Consumer Price Index (CPI) and why is it important?

The Consumer Price Index (CPI) measures changes in the price level of a basket of goods and services consumed by households. It's a key indicator for tracking inflation and making informed economic decisions.

3. How does the new CPI series differ from the old CPI series?

The new CPI series incorporates updated base year and methodologies for calculating inflation. A key difference is the adjusted weight of food and beverage items, which is now 36.76% compared to 45.86% in the old series.

4. Why is the retail inflation drop to 2.75% in January significant?

The drop to 2.75% indicates easing inflationary pressures in the economy. This could influence monetary policy decisions by the Reserve Bank of India (RBI), potentially leading to adjustments in interest rates.

5. How might the change in CPI methodology impact common citizens?

The revised CPI methodology aims to provide a more accurate reflection of price changes experienced by households. This can affect the cost of living adjustments, wages, and social security benefits.

6. What role does the National Statistical Office (NSO) play in the context of CPI data?

The National Statistical Office (NSO) plays a crucial role in collecting and disseminating CPI data. It is responsible for ensuring the accuracy and timeliness of this important economic indicator.

7. What are the potential implications of the reduced retail inflation for monetary policy?

Lower retail inflation may give the Reserve Bank of India (RBI) more flexibility in setting interest rates. It could potentially lead to a reduction in interest rates to stimulate economic growth.

8. How can I relate this news about retail inflation to other economic concepts for the UPSC Mains exam?

You can relate this to concepts like monetary policy, fiscal policy, economic growth, and poverty. For example, discuss how lower inflation can impact consumer spending and investment, ultimately affecting economic growth and poverty reduction efforts.

Exam Tip

In Mains, always try to link current events to fundamental economic concepts to demonstrate a comprehensive understanding.

9. What are the limitations of using CPI as a sole measure of inflation?

CPI might not fully capture the actual inflation experienced by all sections of the population due to varying consumption patterns. Also, it may not immediately reflect changes in the quality of goods and services.

10. Why is the CPI series periodically revised?

The CPI series is periodically revised to reflect changes in consumption patterns, update the base year, and incorporate improved methodologies for calculating inflation. This ensures the data remains relevant and accurate.

Practice Questions (MCQs)

1. Consider the following statements regarding the Consumer Price Index (CPI) in India: 1. The weight of food and beverage items in the new CPI series is 45.86%. 2. The RBI uses CPI data to formulate monetary policy. 3. The first CPI in India was constructed after independence. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.2 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is INCORRECT: The weight of food and beverage items in the new CPI series is 36.76%, not 45.86%. The latter was the weight in the old series. Statement 2 is CORRECT: The RBI uses CPI data as a primary indicator for formulating its monetary policy. Statement 3 is INCORRECT: The first CPI in India was constructed during World War I, much before independence.

2. With reference to the recent changes in the Consumer Price Index (CPI) series, consider the following: Assertion (A): The retail inflation has decreased to 2.75% in January under the new CPI series. Reason (R): The new CPI series incorporates updated base year and methodologies for calculating inflation. In the context of the above, which of the following is correct?

  • A.Both A and R are true and R is the correct explanation of A
  • B.Both A and R are true but R is NOT the correct explanation of A
  • C.A is true but R is false
  • D.A is false but R is true
Show Answer

Answer: A

Both the assertion and the reason are true. The retail inflation did decrease to 2.75% in January under the new CPI series, and this decrease is linked to the updated base year and methodologies used in the new series. Thus, the reason correctly explains the assertion.

3. Which of the following statements is NOT correct regarding the recent changes in the CPI series?

  • A.Retail inflation dropped to 2.75% in January under the new CPI series.
  • B.The weight of food and beverage items has been adjusted in the new series.
  • C.The previous rate of inflation in the new CPI series was 5.06%.
  • D.The new CPI series incorporates updated methodologies for calculating inflation.
Show Answer

Answer: C

Option C is NOT correct. The previous rate of inflation in the new CPI series was 4.06%, not 5.06%. The other options are correct as per the provided summary.

Source Articles

Retail inflation rises to 2.75% under new CPI data series | Business News - The Indian Express

The Indian Express·13 Feb 2026

India's retail inflation at eight-month high, touched 2.75% in January under new series

The Indian Express·13 Feb 2026

Indian IT stocks under fire: Nifty, Sensex set for low opening ahead of US inflation report | Business News - The Indian Express

The Indian Express·13 Feb 2026

Latest News on India Retail Inflation: Get India Retail Inflation News Updates along with Photos, Videos and Latest News Headlines | The Indian Express

The Indian Express·13 Feb 2026

GKSolverToday's News