Defending the continued exclusion of items distributed free under the Public Distribution System (PDS), Garg said inflation measurement is based on expenditure actually incurred by households and follows established international norms.
“Internationally, free items are not included in CPI because inflation should reflect actual expenditure,” he said, adding that including free cereals would raise questions about whether other free services such as public health and education benefits should also be counted.
At the same time, Garg cautioned that the new CPI series cannot be directly compared with the previous index despite the government providing a linking factor. Differences in weights, data sources and the addition of nearly 500 new markets mean the two series are “not strictly comparable,” he said.
The January reading of 2.75% marks the first inflation print under the revised series with base year 2024. MoSPI has released data for the entire calendar year 2025 under both the old and new series to enable month-to-month reference.
According to Garg, the latest inflation print was influenced by higher prices in personal care items and jewellery, including silver, even as several food items remained in negative territory. He said drivers of inflation will continue to vary from month to month.
The revised CPI basket reflects findings from the 2022–23 and 2023–24 Consumer Expenditure Surveys. The weight of food and beverages has declined to below 38%, indicating a reduced share of household spending on food over the past decade, while housing, utilities and services have gained weight.
The number of items in the basket has increased from 299 to 358, with a roughly 25% rise in services coverage, providing greater granularity across 12 divisions.
On core inflation, Garg said there is no universal definition and statistical offices typically publish headline and sectoral inflation, while central banks and finance ministries derive core measures as required.
MoSPI remains “agnostic” on the inflation outlook, he added, noting that drivers such as food prices and precious metals can shift from month to month.
India aims to follow a five-year rebasing cycle in line with international practice, with the next Household Consumption Expenditure Survey scheduled for 2027–28 and the next base revision likely around 2030–31.
