India's inflation rises to 3.21% as oil price risks grow
What's the story
India's retail inflation, as measured by the Consumer Price Index (CPI), increased to 3.21% in February from a revised 2.74% in January, government data showed on Thursday. The rise was slightly higher than the CNBC-TV18 poll estimate of 3.1%. Food inflation, which is a major contributor to the index, stood at 3.47% in February compared to January's 2.13%.
Index revision
Revised CPI series shows sequential rise in prices
The data release also introduces a revised CPI series by the government. The base year for this index has been updated from 2012 to 2024, and the number of items in the consumption basket has been increased from 299 to 358. This revised series shows that prices have been rising sequentially for four consecutive months, with the CPI index at 104.57 in February, up from January's 104.46 and December-November's 104.10 each.
Basket adjustment
Food's share in revised CPI basket falls below 40%
The revised CPI basket has also seen a reduction in the share of food. For the first time, food's weight in this index has fallen below 40%, while non-food categories now account for over 60% of the basket, up from around 45% earlier. The revised framework gives more effective weightage to rural consumption, reflecting its growing contribution to overall demand in India's economy.
Regional inflation
Highlights of other inflation indicators
Rural inflation increased to 3.37% from January's 2.73%, while urban inflation rose to 3.02% from 2.77%. Housing inflation also saw a slight increase, rising to 2.12% from January's 2.05%. Clothing and footwear inflation moderated slightly at 2.81%, down from January's 2.98%. Inflation in restaurant and accommodation services eased slightly at a rate of increase of 2.73%, compared with January's rate of 2.87%.