Feb 12 (Reuters) – India’s key inflation rate accelerated to 2.75% in January, the maiden print under a revised data series showed on Thursday, returning to the central bank’s target band for the first time since August.
A Reuters poll had projected retail inflation at 2.4%.
The new series seeks to capture changing consumption patterns in the world’s most-populous country with revised weighting for components such as food and housing, and an updated base year of 2024.
COMMENTARY:
PARAS JASRAI, ASSOCIATE DIRECTOR, INDIA RATINGS AND RESEARCH, GURUGRAM
“The first imprint for January 2026 under the new base (2023-24) stood at 2.8%, which was in line with India Ratings & Research’s expectations (2.5%). The pick up in inflation in January 2026 was on account of food prices, which turned to an inflationary trajectory.”
“Inflation is expected to pick up in the coming quarters, however, it is expected to be within the tolerance band of the RBI’s Monetary Policy Committee (MPC). For February 2026, we expect the retail inflation to average 3.2%. Since the longer-period data is not available at present, it is difficult to make any medium- to long-term prediction based on 13 months data released at present. Given the stable and controlled inflation so far, along with a positive growth outlook owing to the various trade deals that have been signed in the recent time frame, we expect the MPC to maintain a status quo in the policy rates in the near term.”
SUJAN HAJRA, CHIEF ECONOMIST & EXECUTIVE DIRECTOR, ANAND RATHI GROUP, MUMBAI
“Retail inflation picked up in Jan’26, with CPI inflation rising to 2.7% y/y, marking the first official release under the new CPI series with 2024 as the base year, which updates consumption weights to better reflect current spending patterns.”
“The print indicates a firming in price momentum compared with the unusually soft readings seen toward the end of 2025, when food prices had kept headline inflation subdued. Even with the uptick, inflation remains comfortably below the RBI’s 4% target, suggesting overall price pressures are still contained. Looking ahead, inflation is expected to edge higher gradually as base effects fade and food inflation picks up gradually.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“Headline inflation remains below 3% for January. Although the new CPI series suggests that food inflation is higher, core inflation is more moderate than anticipated for January. Indicators like housing inflation also confirm that inflationary pressures in the segment do not show any spikes.”
“The new series data does not change our view over RBI action going forward and we expect the central bank to remain on hold through FY27.”
MADAN SABNAVIS, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI
“There has been a considerable change in the composition of the index, with the weight of food items now being brought down to 36.8%. This makes a difference for the index and inflation as these prices tend to be more volatile and hence have brought large shifts in the inflation numbers in the past.”
“Given the composition of the index and the dilution of the base effect for food items, we may expect inflation to climb upwards in the coming months. This would mean a long pause from the point of view of the RBI on rates. There may not be too much of an alteration in the inflation forecasts by the RBI for next year.”
SACHCHIDANAND SHUKLA, GROUP CHIEF ECONOMIST, LARSEN & TOUBRO, MUMBAI
“The overall number is in line with expectations. The retail inflation measure is now more accurate, more relevant and useful for policy purposes.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The CPI inflation came in line with expectations. While details are still awaited, the core inflation looks significantly lower than our expectations.”
“While inflation trajectory remains fairly benign, we believe the RBI’s rate-cutting cycle has come to an end, with the RBI likely to continue to hold rates on pause for an extended period through CY26 at least.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“There were a few unknowns in the revised series, especially the impact of methodological changes on the headline.”
“The revised inflation series carried a modest upside bias compared to the older base, with firmer food likely to have offset by a more subdued read on core inflation.”
“Precious metals remained apace under the new series as well. We don’t expect the refreshed inflation trend to meaningfully influence policy decisions in the near term, with an extended rate pause likely, supported by a positive cyclical upswing and confidence effects stemming from the successful conclusion of the U.S.-India trade negotiations.”
MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI
“We do not expect the new inflation series to materially influence policy in the near term. An extended rate pause looks likely, underpinned by a cyclical upturn in both growth and inflation and improving confidence following the conclusion of the U.S.–India trade negotiations.”
(Reporting by Yagnoseni Das, Urvi Dugar, Hritam Mukherjee, Komal Salecha, Nishit Navin, Kashish Tandon, Meenakshi Maidas in Bengaluru; Compiled by Abinaya Vijayaraghavan, Editing by Eileen Soreng)
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