Economists stated that the recently released CPI inflation data is not expected to significantly affect policy decisions in the near future. The headline CPI inflation for January 2026, based on the new CPI series with a 2024 base year, stood at 2.75%, falling well below the RBI MPC’s target range midpoint of 2%-6%. Madhavi Arora, Chief Economist at Emkay Global Financial Services, mentioned that the new inflation series is unlikely to have a substantial impact on policy, foreseeing a prolonged rate pause supported by an upturn in growth, inflation, and enhanced confidence post the US-India trade talks.
The year-on-year inflation rates for 11 out of 12 divisions of the CPI varied between 0.1% and 3.4%, all below the 4% mark. Notably, personal care, social protection, and miscellaneous goods and services showed a high inflation rate of 19.0%, primarily driven by the surge in gold and silver prices. Aditi Nayar, Chief Economist at ICRA Ltd, highlighted that the new CPI series differs from the old series due to changes in composition, weights, and calculation methods.
Nayar further explained that despite the differences, the headline inflation figure for January 2026 was slightly higher than the estimated 2.5% under the old series, mainly due to adjustments in the food and beverages segment. The changes in the weights of various items within the food and beverages category are expected to impact the volatility of the headline inflation rates compared to the old series.
The anticipated rise in CPI inflation for the fiscal year 2027, as per the old series, was largely linked to the food and beverages segment. However, with the new series assigning a lower weight to this segment, the projected increase in headline inflation for FY2027 might be moderated. Economists noted that the forthcoming CPI inflation data for February, preceding the next MPC meeting, could provide further insights for interpreting the CPI trends.
