India’s January retail inflation at 2.75% in first print under new data series

NEW DELHI: India’s key inflation rate accelerated to 2.75% in January on higher food and precious metal prices, 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.

The new series changes the weighting of key components such as food and housing, while moving the base year to 2024 from 2012 to better capture changes in consumption patterns over the years.

Annual retail inflation was at 1.33% in December under the old base year of 2012, government data showed. A Reuters poll had projected retail inflation at 2.4%.

India’s December retail inflation rises to 1.33% y/y

Food price inflation was at 2.13% year-on-year in January.

The government has not shared comparable data for key components under the new series.

Among the most notable changes under the new series, the government has sharply cut the weight of food, one of the most volatile components of the retail price index, to roughly 37% from around 46%.

The cuts in consumption taxes by Prime Minister Narendra Modi’s government last year are expected to keep inflation in check, while an interim trade deal with the U.S. has improved market sentiment.