The Reserve Bank of India (RBI) is expected to keep the policy repo rate unchanged at 5.25% at its April meeting, as the newly-adopted inflation measurement series is unlikely to significantly shift the price trajectory, while the central bank also awaits the release of revamped GDP data on 27 February, economists said.
The statistics ministry on Thursday released the first inflation print under the new series, with 2024 as its base year, for January 2026, which came in at 2.75%. While comparable inflation figures are not available for the previous months due to statistical limitations, an assessment of month-on-month movement in Consumer Price Index (CPI), also released on Thursday, shows rising price pressures—similar to the trajectory that was already playing out even under the erstwhile 2012 series.
New series, same trend
Data shows that CPI rose 0.35% month-on-month in January 2026, compared to 0.09% in December 2025 and 0.26% in November 2025.
“It is important to note that the new base and old base are not directly comparable because the basket and data sources have changed,” Saurabh Garg, secretary at the ministry of statistics and programme implementation, told Mint. “Therefore, the index itself, rather than the inflation numbers, is the correct metric to compare on a month-on-month basis.”
However, as the month-on-month data shows, while the base year and methodology are new, the implications for inflation management and, hence, monetary policy, appear to be similar, as of now.
By the time the RBI Monetary Policy Committee meets in April, it will have inflation data under the new series for one more month (February), due on 12 March.
Policy pause
The RBI, which delivered a cumulative cut of 125 basis points in the policy repo rate between February 2025 and December 2025, kept policy rates unchanged at the monetary policy review earlier this month. It projected CPI inflation at 4.0% for Q1 FY27 and 4.2% for Q2 FY27, while maintaining that the monetary policy committee will be guided by the evolving macroeconomic conditions and the outlook based on data from the new series.
According to Madan Sabnavis, chief economist at Bank of Baroda, the new series will only marginally change RBI’s projections as the January 2026 figure was broadly in line with what economists had anticipated based on the old series, suggesting only minor reset in the inflation trajectory due to base year revision. “The important part is that the trajectory will be in an upward direction this year and the new fiscal CPI will likely be in the 4% range, which will not be justified for lowering the rate further,” Sabnavis said.
Data reset ahead
Dhiraj Nim, an economist at ANZ Research, noted that the absence of granular historical data will lead to forecasting challenges, but the monetary policy calculus will remain unchanged. “The overarching trend of rising headline inflation from subdued levels, coupled with weak core inflation excluding precious metals, continues,” he said.
Among the major changes under the new CPI series is the lower weight of food and beverages of 36.75%, compared to 42.61% in the old series. This will help reduce volatility in the headline numbers, economists said.
The RBI’s decision will also be taken against the backdrop of more information expected over the next few weeks. The new GDP data with 2022-23 base year, updated from 2011-12 base year, is scheduled to be released on 27 February.
The reset is expected to lead to revisions in the size of the economy and growth rates. “These data points will be key to reassess India’s growth-inflation mix and the direction of monetary policy action,” Aditi Nayar, chief economist at Icra, said.