Revised CPI series reduces noise, reflects changing consumption patterns: SBI Ecowrap

India’s core inflation eases to 3.4% under new series (vs 4.15% in old series); headline inflation rises to 2.75% (vs 2.55%). At first glance, the revised series appears to reduce noise, broaden coverage and better reflect evolving consumption patterns, according to SBI Research’s Ecowrap report. 

Gold, silver drive personal care inflation 

As per the report, personal care inflation surged to 19.02% in January, driven by gold inflation at 46.77% and silver inflation at 159.67%. 

Within food, price pressures were concentrated in select items, with tomato inflation at 64.8%, coconut at 47.18% and coconut oil at 40.4%. In contrast, prices of garlic (-53.05%), onion (-29.27%) and potato (-28.98%) saw sharp declines. 

Among states, Telangana recorded the highest inflation at 4.92%, followed by Kerala (3.67%), Tamil Nadu (3.36%), Rajasthan (3.17%), and Karnataka (2.99%). 

Major methodological overhaul in CPI-2024 

The revised CPI (Base: 2024=100) introduces significant methodological and coverage changes. 

The country’s retail inflation inched up to 2.75% in January under the new 2024 base year series, compared with 2.55% under the old 2012 series (using the linking factor), reflecting a 20 basis point difference due to methodological changes, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).  

Rural inflation stood at 2.73% and urban inflation at 2.77% in January. Food inflation was recorded at 2.13%. Core inflation under the new 2024 series was estimated at 3.4% in January 2026, lower than the 4.15% calculated under the 2012 series. The decline in core inflation is largely attributed to a reduced weight for gold in the new series—cut to 0.62% from 1.02% earlier. 

A key technical shift is the adoption of the Jevons short index formula, which compiles price changes sequentially rather than directly from the base period, making it easier to incorporate new items. 

The weight structure has also been reworked. Under the 2024 classification, the weight of food and beverages stands at 36.75%. If mapped to the older 2012 structure, it would have been about 42.62%, compared with 45.86% earlier, indicating a structural reduction in food’s share in the consumption basket. Changes in food weights reflect both basket revision (5.76%) and standard revision (3.3%), resulting in a new combined weight of 36.8%. 

The housing price index has been expanded to include rural areas, whereas the earlier series covered only all-India and urban housing. Prices for employer-provided accommodation have now been excluded. 

Expanded coverage, but skewed additions 

The CPI-2024 series has widened geographic and item coverage, adding 565 new markets across rural and urban areas compared to CPI-2012. However, 43% of these additions are concentrated in Uttar Pradesh and Maharashtra, indicating a skew in expansion. 

Additionally, 12 online markets across major cities—including Mumbai, Delhi, Bengaluru, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, Pune, Jaipur, Lucknow, and Kanpur—have been incorporated to capture weekly price variations on e-commerce platforms. However, selection is based on the 2011 Census, leaving out rapidly growing cities such as Indore, Patna, Nagpur, Bhopal, and Thane, which are nearing the 25-lakh population mark. 

While direct comparisons between the old and new series remain complex due to structural changes, analysts note that the most significant improvement in the CPI-2024 dataset is its detailed sub-classification, which is expected to aid policymakers, regulators and researchers in more granular policy analysis and trend assessment.