India's New Inflation Basket Explains India's New Consumers

• India's January consumer prices rose 2.75% Y/Y, slightly below the 2.77% estimate, supporting the RBI's decision to hold rates for an extended period.
• The new CPI series, based on 2024 consumption patterns, expands the basket from 299 to 358 items, removing outdated goods and adding modern spending categories like streaming services and gym equipment.
• Food's weight in the CPI is reduced, while services like housing (including utilities) and consumer discretionary items see increased weighting, reflecting evolving spending patterns and improving data accuracy and global credibility. New GDP and IIP series are also coming.

India has unveiled a major overhaul of its inflation index with a new CPI series based on 2024 consumption patterns. This new series shows January consumer prices rising 2.75% year-on-year, slightly below estimates. The changes aim to provide a more accurate and credible reflection of the economy, boosting the case for the RBI to maintain current rates.