Government unveils new CPI series with 2024 base year

New CPI series places retail inflation at 2.75% in January 2026.

Photo by Aquib Akhter

The Ministry of Statistics and Programme Implementation (MoSPI) released the Consumer Price Index (CPI) data based on a new series with 2024 as the base year, placing retail inflation in January 2026 at 2.75%. As this is the first data release under the new series, a historical comparison is not yet possible.

The new series includes 358 items, up from 299 in the older series, and gives new weights to goods and services based on consumption patterns revealed in the Household Consumption Expenditure Survey (HCES) 2023-24. Data are collected from 1,465 rural markets and 1,395 urban markets.

Key Facts

The new CPI series has a base year of 2024.

Retail inflation in January 2026 is measured at 2.75% under the new series.

The new series includes 358 items, up from 299 in the older series.

Data is collected from 1,465 rural markets and 1,395 urban markets.

UPSC Exam Angles

GS Paper 3: Economy - Inflation, Economic Growth and Development

Connects to syllabus topics on inflation measurement, monetary policy, and data collection methods

Potential question types: Statement-based, analytical questions on the impact of CPI on policy decisions

Visual Insights

Key CPI Figures - January 2026

Dashboard highlighting the key CPI figures released under the new 2024 base year series.

Retail Inflation (January 2026): 2.75%
Number of Items in New CPI Series: 358

More Information

Background

The Consumer Price Index (CPI) is a crucial economic indicator that measures changes in the price level of a basket of consumer goods and services purchased by households. Understanding its historical context is essential. The CPI's origins can be traced back to the early 20th century when the need arose to track the cost of living, particularly for wage negotiations. Early versions of the CPI focused on a limited set of goods and services, primarily necessities like food and clothing. Over time, the CPI has evolved significantly to reflect changing consumption patterns and advancements in data collection methods. The base year for the CPI is periodically revised to ensure that the index accurately reflects current spending habits. These revisions involve updating the basket of goods and services included in the index, as well as adjusting the weights assigned to each item. The Household Consumption Expenditure Survey (HCES) plays a vital role in determining these weights, capturing how households allocate their spending across different categories. The legal and institutional framework for the CPI in India is primarily managed by the Ministry of Statistics and Programme Implementation (MoSPI). MoSPI is responsible for collecting, compiling, and disseminating CPI data. The National Statistical Office (NSO), under MoSPI, conducts the HCES and other surveys necessary for calculating the CPI. The Reserve Bank of India (RBI) also closely monitors the CPI as a key input for formulating monetary policy. The RBI Act, 1934 empowers the RBI to regulate the money supply and credit system in India, with the goal of maintaining price stability.

Latest Developments

Recent years have seen increased focus on improving the accuracy and representativeness of the CPI. The adoption of a new base year, as seen with the 2024 series, is a key step in this direction. This ensures that the CPI reflects the latest consumption patterns and includes new goods and services that have become significant in household budgets. The Periodic Labour Force Survey (PLFS) also contributes to understanding employment trends and their impact on household income and expenditure. There are ongoing debates about the best methods for calculating the CPI and addressing potential biases. Some economists argue that the CPI may overstate inflation due to issues like substitution bias (consumers switching to cheaper alternatives when prices rise) and quality improvements (products becoming better over time). The RBI's Monetary Policy Committee (MPC) carefully considers these factors when setting interest rates to manage inflation. Looking ahead, it is expected that the CPI will continue to evolve with further refinements in data collection and methodology. The government aims to enhance the timeliness and accuracy of CPI data to provide policymakers and the public with reliable information on inflation trends. The increasing use of technology and big data analytics is likely to play a significant role in improving the CPI in the future. The target is to keep retail inflation within a manageable range to support sustainable economic growth.

Frequently Asked Questions

1. What are the key facts about the new CPI series with 2024 base year that are important for the UPSC Prelims exam?

The key facts to remember are: the base year is 2024; retail inflation for January 2026 is measured at 2.75% under this new series; the series includes 358 items, an increase from 299 in the older series; and data collection spans 1,465 rural and 1,395 urban markets.

Exam Tip

Focus on the base year and the number of items included in the new series. These are frequently tested in prelims.

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

The Consumer Price Index (CPI) measures changes in the price level of a basket of consumer goods and services purchased by households. It is important because it indicates inflation, influences monetary policy decisions, and affects the cost of living for common citizens.

3. How does the new CPI series (base year 2024) differ from the previous CPI series?

The new CPI series differs from the previous one primarily in its base year, the number of items included, and the weighting of goods and services. The new series uses 2024 as the base year, includes 358 items compared to 299 in the older series, and uses consumption patterns from the Household Consumption Expenditure Survey (HCES) 2023-24 for weighting.

4. Why is the government updating the CPI series with a new base year?

The government updates the CPI series to reflect the latest consumption patterns and include new goods and services that have become significant in household budgets. This ensures that the CPI remains an accurate measure of inflation and the cost of living.

5. What impact does the change in the CPI base year have on common citizens?

The change in the CPI base year can affect the perceived rate of inflation and, consequently, impact wages, pensions, and other cost-of-living adjustments. A more accurate CPI helps in better policy decisions related to social welfare and economic stability.

6. What are the important numbers associated with the new CPI series that one should remember for the exam?

The key numbers to remember are: 2.75% (retail inflation in January 2026), 358 (total number of items covered under the new CPI series), and 299 (number of items in the older CPI series).

Practice Questions (MCQs)

1. Consider the following statements regarding the Consumer Price Index (CPI) in India: 1. The Ministry of Finance is responsible for collecting and disseminating CPI data. 2. The base year for the new CPI series is 2024. 3. The new CPI series includes fewer items than the older series. Which of the statements given above is/are correct?

A.1 only
B.2 only
C.1 and 3 only
D.2 and 3 only

Show Answer

Answer: B

Statement 1 is INCORRECT: The Ministry of Statistics and Programme Implementation (MoSPI) is responsible for collecting and disseminating CPI data, not the Ministry of Finance. Statement 2 is CORRECT: The base year for the new CPI series is indeed 2024, as mentioned in the news. Statement 3 is INCORRECT: The new CPI series includes 358 items, which is more than the 299 items in the older series.

2. With reference to the Household Consumption Expenditure Survey (HCES), consider the following statements: 1. HCES data is used to determine the weights of goods and services in the Consumer Price Index (CPI). 2. The HCES is conducted by the Reserve Bank of India (RBI). 3. The HCES 2023-24 revealed the consumption patterns used for the new CPI series with 2024 as the base year. Which of the statements given above is/are correct?

A.1 only
B.1 and 3 only
C.2 and 3 only
D.1, 2 and 3

Show Answer

Answer: B

Statement 1 is CORRECT: HCES data is indeed used to determine the weights of goods and services in the CPI. Statement 2 is INCORRECT: The HCES is conducted by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI), not the RBI. Statement 3 is CORRECT: The HCES 2023-24 provided the consumption patterns for the new CPI series with 2024 as the base year.

3. Which of the following statements best describes the role of the Reserve Bank of India (RBI) in relation to the Consumer Price Index (CPI)?

A.The RBI is directly responsible for calculating and publishing the CPI data.
B.The RBI uses the CPI data as a key input for formulating monetary policy.
C.The RBI has no role in monitoring or using the CPI.
D.The RBI only uses the CPI for reporting to international organizations.

Show Answer

Answer: B

Option B is correct: The RBI uses the CPI data as a key input for formulating monetary policy. The RBI Act, 1934 empowers the RBI to regulate the money supply and credit system in India, with the goal of maintaining price stability. The CPI is a crucial indicator for assessing inflation and making decisions about interest rates and other monetary policy tools. Option A is incorrect: The Ministry of Statistics and Programme Implementation (MoSPI) is responsible for calculating and publishing the CPI data. Options C and D are incorrect because the RBI actively monitors and uses the CPI for its policy decisions.