January retail inflation rises to 2.75%, highest in eight months:Govt takes 2024 as base year to calculate retail prices

Retail inflation rose to 2.75% in January, up from 1.33% in December, marking its highest level in the past eight months, according to government data released on Thursday, February 12. The last time inflation was higher was in May 2025, when it stood at 2.82%. The January figure was largely in line with expectations, as a Bloomberg survey of 32 economists had projected inflation at around 2.77%. Retail Inflation Trend in FY 2025–26 Inflation measurement gets new base year The government has revised the base year for calculating retail inflation from 2012 to 2024, the first such change in over a decade. The update aims to better reflect current consumption patterns and spending behaviour. Food weight reduced in new cpi basket Under the revised index, the weight of food and beverages has been reduced from around 50% to 36.8%. Statistics Ministry Secretary Saurabh Garg said the change reflects rising incomes, as households now spend relatively less on food and more on housing, transport and services. What items were removed and added Removed from the index: Tonga-cart fares Added to the index: Retail inflation hit 14-year low in October Retail inflation had fallen to a record low of 0.25% in October, driven mainly by a sharp decline in food prices. This was the lowest level recorded under the current CPI series and the lowest inflation in nearly 14 years. In September, inflation stood at 1.44%. What is the base year? The base year is the reference year against which price changes are measured. Prices in the base year are assigned a value of 100, and inflation shows how much prices have risen or fallen compared to that year. For example, if tomatoes cost ₹50 per kg in the base year and ₹80 later, inflation would be calculated as a 60% increase. How inflation is calculated Retail inflation is measured using the Consumer Price Index (CPI), which tracks changes in prices of everyday items such as food, fuel and services. Inflation rises when demand outpaces supply and falls when supply exceeds demand. The government typically updates the CPI base year every 5–10 years to ensure inflation data reflects current economic conditions.