New Delhi: India’s Consumer Price Index (CPI) is expected to remain below the 4 per cent target even under the newly introduced CPI series, which provides a more accurate reflection of the country’s evolving consumption patterns and aligns price data with global standards, a Bank of Baroda report said on Friday.

Core inflation under watch

The report noted that while core inflation requires close monitoring—especially due to potential upside risks from precious metal prices—the recalibrated weights in the new CPI series are expected to keep inflation within the Reserve Bank of India’s target range of 4 per cent, plus or minus 2 per cent.

“The new CPI series ensures that headline inflation, the primary variable for monetary policy, remains contemporary and comparable with international practices,” the report said.

Food inflation and seasonality adjustments

The new CPI series has better captured seasonal price movements in most food items through adjusted weights. The Bank of Baroda forecast that ongoing government supply-side measures should help maintain a desirable food inflation trajectory.

The bank’s Essential Commodities Index (ECI) showed a year-on-year decline of 0.4 per cent for the first 11 days of February 2026. Aside from some edible oils and pulses, high-frequency food prices are largely stable and do not pose immediate inflationary risks.

However, in the new CPI base, food inflation has reversed the deflationary trend seen over the past seven months under the previous series. This shift is attributed to the reduced weight of highly volatile items such as tomatoes, onions, and potatoes.

Expanded coverage and modernised basket

The revised CPI series now includes 358 weighted items, up from 299, covering 1,465 rural and 1,395 urban markets, along with 12 online marketplaces. The weight of food in the CPI basket has been lowered to 40.1 per cent from 45.8 per cent.

New inclusions in the basket reflect contemporary consumption, including rural housing, online streaming services, value-added dairy products, barley, pendrives, and external hard disks. Outdated components such as radios, tape recorders, DVD players, and second-hand clothing have been removed.

The Bank of Baroda report concluded that the new CPI series will provide policymakers with more accurate, timely, and internationally comparable data to guide monetary and fiscal decisions in India.

IANS