Food Price Spikes Mark India's New CPI Basket
January 2026 marked the first month of India's revised Consumer Price Index (CPI) basket, which aims to better capture urban consumption patterns. While overall inflation remains calm, the new data reveals isolated but significant price spikes in key food items. The price of tomatoes increased by nearly 65% and coconut products rose by over 40%, impacting household budgets.
- The new CPI basket's base year is updated to 2024 from 2012, based on the findings of the 2023-24 Household Consumption Expenditure Survey. - The most significant change is the reduction in the weightage of "Food and Beverages" from 45.86% to 36.75%, while the weight for "Housing" (which now includes utilities) increased from 10.07% to 17.67%. - To reflect modern spending, the basket now includes 358 items, up from 299, adding services like OTT subscriptions and e-commerce purchases while removing outdated items like DVD players and audio cassettes. - While specific food items spiked, the overall Consumer Food Price Index (CFPI) inflation was 2.13% in January, exiting a seven-month streak of deflation recorded under the old series. - The price spikes in tomatoes and coconuts were offset by significant price drops in other staples; garlic prices fell by over 53%, while onion and potato prices dropped by about 29% each. - This revision was undertaken by the Ministry of Statistics and Programme Implementation (MoSPI) to make headline inflation less volatile from seasonal food price shocks and to provide a more stable metric for policy decisions by the Reserve Bank of India. - Beyond food, the highest inflation was recorded in the "personal care, social protection and miscellaneous goods and services" category at 19.0%, driven largely by a sharp increase in gold and silver prices. - For the first time, the CPI basket is tracking prices from 12 online platforms and including rural house rent, acknowledging the growth in e-commerce and improving the representativeness of rural housing expenditure.
