The new CPI series (base year: 2024) pegged the year-on-year (YoY) headline CPI inflation at 2.75% for January 2026 (ICRA exp: +2.5%, as per 2012 base), well below the mid-point of the Monetary Policy Committee’s (MPC’s) medium-term inflation target range of 2-6%. While as many as 11 of the 12 divisions witnessed benign inflation rates, ranging between 0.1% and 3.4% in January 2026, personal care, social protection and miscellaneous goods and services was the outlier with an elevated 19.0% inflation, largely reflecting the expansion in gold and silver prices.

• Core inflation (CPI excluding food and beverages; F&B, and electricity, gas and other fuels) printed at a muted 3.4% in January 2026. The new CPI series is not comparable to the old series owing to the change in composition, weights as well as inclusion of new items which are relevant in current consumption basket as per the household consumption expenditure survey (HCES) of 2023-24.
• As per ICRA’s assessment, the expected uptick (based on the old series) in the CPI inflation in FY2027 relative to FY2026 was largely anticipated to be driven by the F&B segment. With a somewhat lower weight for F&B in the new series vs. the old series, the expected base effect-led uptick in the headline print in FY2027 would likely be tempered. Nevertheless, the MPC would assess additional data, including the February 2026 CPI print, as well as upcoming potential revisions in GDP size and growth rates, which would be key to reassess India’s growth-inflation mix and the direction of monetary policy action.