New Delhi is bracing for a revamped Consumer Price Index (CPI) series that promises to maintain inflation below the Reserve Bank’s 4% target while offering a sharper lens on evolving consumer spending patterns. According to a detailed report from Bank of Baroda released on Friday, this updated framework aligns with international standards, aiding more precise monetary policy decisions.
The report underscores the importance of monitoring core inflation closely, especially amid risks of surging prices in gold and silver. Yet, with a rebalanced weighting of items, inflation is expected to hover comfortably within the 4% ±2% band. This modernization ensures the headline inflation figure is more accurate and reflective of current economic realities.
Key enhancements include better accounting for seasonal fluctuations in food prices, a critical factor in India’s inflation dynamics. The new series expands the basket from 299 to 358 items, incorporating data from 1,465 rural markets, 1,395 urban centers, and even 12 online platforms. Food’s weightage has been trimmed from 45.8% to 40.1%, making room for modern essentials like rural housing, online streaming services, value-added dairy products, barley, pen drives, and external hard disks.
Outdated items such as radios, tape recorders, DVD players, and old clothes have been phased out. Notably, food inflation shows a slight uptick in the new series compared to seven months of decline in the old one, attributed to reduced weights on volatile vegetables like tomatoes, onions, and potatoes.
Government supply-side measures are poised to keep food inflation in check. Bank of Baroda’s Essential Commodity Index (ECI) reveals a 0.4% year-on-year price drop in essentials during the first 11 days of February 2026, with most food items stable except select oils and pulses.
This overhaul positions India’s CPI as a robust tool for policymakers, promising stability and foresight in an era of shifting consumption trends.