Note: This is an evergreen explainer. It contains no current inflation figures or forecasts.
Every month, a new inflation number makes headlines. It can move bond yields, shape expectations of interest-rate decisions and feed into what banks offer on deposits. For a household, though, a single month's print matters far less than understanding what the number measures — and how it differs from your own experience of prices.
The main measures
| Measure | Published by | What it tracks |
|---|---|---|
| CPI — All India, Rural, Urban | MoSPI | Retail prices of a household consumption basket |
| WPI | Office of the Economic Adviser, Ministry of Commerce and Industry | Wholesale prices of goods |
| Core inflation | Calculated from CPI by analysts and the RBI | CPI excluding food and fuel; definitions vary |
The new CPI series
In 2026, MoSPI moved the CPI to a new series with 2024 as its base year, replacing the 2012 base. The basket was broadened, market coverage widened (including online markets), and weights were updated using recent household consumption survey data, so the index better reflects how households spend today. When comparing with older figures, make sure you are comparing like with like.
Headline and core
Food carries a large weight in India's CPI, and food prices can swing sharply with the season and the monsoon. A spike in vegetable prices can lift headline inflation for a few months, then reverse. Core inflation, which excludes such items, moves more slowly and is often read as a guide to how persistent price pressures are. Neither is "the real" number; they answer different questions.
Year-on-year, month-on-month and base effects
Headline inflation compares this month's index with the same month a year earlier. So the figure depends on both this year's prices and last year's.
For illustration, using a made-up index:
| Index a year ago | Index now | Year-on-year inflation | |
|---|---|---|---|
| Month 1 | 100 | 104 | 4.0% |
| Month 2 | 103 (a price spike) | 105 | about 1.9% |
Prices rose between month 1 and month 2, yet headline inflation fell — because a year earlier, prices had jumped. This is a base effect. When you see a sharp change in the headline figure, check whether it reflects this year's prices or last year's.
How the RBI uses inflation data
Under India's inflation-targeting framework, the RBI aims for CPI inflation of 4%, within a band of 2% to 6%; the government retained this target for April 2026 to March 2031. The Monetary Policy Committee looks at projections and underlying trends, not just the latest print. Its decisions feed into deposit rates and bond yields — see how interest-rate cycles affect debt funds.
What it means for your plan
- Your inflation is personal. Education, healthcare and rent may rise faster than the headline index for your household. Use the categories that matter to you.
- Plan with long-run assumptions. A single month's figure is noise for a 15-year goal. CompoundX tools start with editable defaults — for example, a higher default for education than for general expenses — which you can change to match your experience.
- Think in real terms. What matters is your return after inflation — see nominal vs real return.
- Review once a year. If your costs are rising faster than you assumed, update your goals rather than waiting.
The Inflation Calculator converts today's costs into future rupees on your assumptions, and inflation: the quiet tax explains the long-run effect on savings.