retail inflation Image Credit source: ai generated
Retail Inflation: The Central Government has retired the old scale of measuring inflation in the country. Now along with your kitchen, your lifestyle will also decide the level of inflation in the country. The Ministry of Statistics and Program Implementation has released a new series of Consumer Price Index (CPI) after more than a decade. Under this new formula, in the figures for January 2026, the retail inflation rate has been recorded at 2.75%.
What effect will this have on your pocket?
The government has now changed the base year for inflation calculation from 2012 to 2024. This simply means that now inflation will be compared with the prices of 2024. The biggest feature of this change is that now the ‘basket’ i.e. the list of those things, whose prices keep rising and falling, has become bigger. Earlier this list included 299 items, which has now been increased to more than 350. Now it includes not only pulses and rice, but also modern needs like AirPods, pet food, sanitizer, fitness band and air purifier.
Weightage of food items reduced
A very important change in the new series has taken place regarding the weightage of food items. For the first time, the share of food items in the index has fallen below 40%. Now the share of non-food categories like health, education and entertainment has crossed 60%. If we look at the January figures, inflation was 2.73% in rural areas and 2.77% in urban areas. If we talk only about food, food inflation across the country has been recorded at 2.13%. In rural areas, food items were slightly cheaper than in cities, where the rate was 1.96%.
Housing inflation rate was 2.05%
Housing expenses have also played an important role in these inflation figures. The annual housing inflation rate in January 2026 was 2.05%. Interestingly, housing inflation in rural areas stood at 2.39%, which is higher than the rate of 1.92% in urban areas. According to the old formula, inflation in December 2025 was 1.33%, which now appears to be 2.75% on the new scale. Experts believe that with this new index the government and RBI will now be able to get a more accurate picture of the economy.
