India is updating its method for measuring retail inflation by changing the base year of the Consumer Price Index (CPI) from 2012 to 2024. The final reading under the 2012 base year CPI series says - December 2025 CPI inflation: 1.33% Average inflation (Apr–Dec 2025): 1.7% Same period in 2024: 4.9%Why Does Inflation Feel Higher Than Official Data?Although official inflation numbers appear low, people don’t feel that inflation has eased. That disconnect is the core issue. Household surveys show people feel inflation is ~6.6% They expect it to rise to 8% over the next year Private consumption growth is slowing, not rising, which shouldn’t happen if inflation were truly lowData says inflation is low, lived experience says it’s high. The key drivers behind this mismatch are - Food and fuel price volatility Government subsidies and welfare schemes Housing and services inflation Changes in consumption patterns over time Has the CPI Calculation Changed in India?Yes, starting February 12, India will release inflation data under a new CPI series:New base year: 2024Updated weights using Household Consumption Expenditure Survey (HCES) 2023–24 Why does the new base year matter? Updating the base year:Aligns inflation data with current spending patternsImproves monetary policy signalsHelps bridge the gap between official inflation and household experience Key Takeaway - The old CPI made inflation look artificially low, which confused policymakers and didn’t match people’s lived reality.Updating the base year is long overdue and should make inflation data more credible, accurate, and useful going forward.
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