INR: New CPI series and RBI stance – Commerzbank

Commerzbank analysts explain that India’s new CPI series shows January inflation at 2.8% year-on-year, back within the RBI’s 2–6% target band. The reweighted basket reduces food’s share and should damp volatility. With inflation contained and growth supported by fiscal policy and trade deals, RBI is expected to keep the policy rate unchanged at 5.25%.

Inflation reweighting and policy implications

"January CPI rose 2.8% yoy in the new CPI series with 2024 as the base year vs 1.3% in December under the old series with the base year of 2014."

"Under the new CPI series, inflation returned to the Reserve Bank of India’s (RBI) target range of 2-6% for the first time since August 2025."

"The reweighing should reduce overall volatility and be less susceptible to sharp swings in food prices owing to the weather."

"On monetary policy, the RBI is expected to keep its policy rate unchanged at 5.25% at the next meeting on 8 April."

"Inflation is expected to remain contained near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)