New Delhi, February 2026 — India has officially hit the “reset” button on how it measures the cost of living. In a landmark move, the government has shifted the base year for the Consumer Price Index (CPI) from 2012 to 2024, effectively retiring a decade-old system that failed to account for Netflix, iPhones, and the skyrocketing cost of urban housing.
From Flour to Fiber: What’s in the New Basket?
For the past 11 years, India’s inflation data was skewed by a “basket” of goods that felt increasingly like a time capsule. The old system continued to track the prices of VCRs, DVD players, and cassette tapes—items that have largely disappeared from Indian households.
The 2024 reset overhauls this list, increasing the number of tracked items from 299 to 358.
- The Digital Surge: For the first time, inflation data will formally track OTT subscriptions, mobile data plans, and internet services.
- The E-Commerce Factor: Prices will now be collected from 12 major digital marketplaces (like Amazon and Flipkart), acknowledging that many Indians no longer buy everything from the local kirana store.
- Out with the Old: Obsolete technologies like CD players and radio sets have been officially purged to make room for modern spending habits.
The Great Weightage Shift: Food vs. Lifestyle
The most significant change lies in the “weightage”—the percentage of importance given to different categories. In 2012, food was the undisputed king of the Indian budget. Today, as incomes rise, the script has flipped.
- Food Weightage Dropped: Food and beverages, which previously held a massive 45.86% weight, have been slashed to 36.75%. This reflects a reality where Indians are spending a smaller portion of their income on basic groceries compared to a decade ago.
- Housing & Utilities Spike: To compensate, the weightage for Housing has nearly doubled, jumping from 10% to approximately 17-18%. This includes the rising costs of urban rents, electricity, and water.
Why the Data Reset Matters for Your Wallet
Data is more than just numbers; it dictates national policy. The first set of data under this new series for January 2026 placed retail inflation at 2.75%, a figure that would have looked very different under the old 2012 lens.
This reset has three major real-world impacts:
- Interest Rates: The RBI uses CPI to decide whether to raise or lower your home loan interest rates (Repo Rate). Accurate data prevents the RBI from making “blind” decisions based on outdated habits.
- Salaries and Pensions: Government allowances (DA) and many private-sector wage adjustments are linked to CPI. The reset ensures these raises match what people are actually spending money on today.
- Social Welfare: It allows the government to better target subsidies for gas, electricity, and health services by identifying where the real price pain points are located.
Bottom Line
The 2012 base year was a reflection of an India that was just beginning its digital journey. The 2024 base year captures an India that is mobile-first, urban-heavy, and service-oriented. By aligning with international standards, India has ensured that its path toward a $5 trillion economy is measured with a modern ruler, not a broken yardstick.
