CPI Is An Index
It is not a single product's price and it is not the total amount every family spends. It is a weighted measure that summarises price changes across the selected basket.
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Inflation Measurement
Consumer Price IndexWhat Does CPI Tell Us?
When the price of vegetables, rent, transport, school fees and medicines changes, how can we tell whether the overall cost of living is rising? The Consumer Price Index helps measure those changes using a representative basket of consumer goods and services.
Learn how CPI works, explore India's monthly retail inflation figures for 2026, and understand why the number matters to families, businesses and the economy.
Explore India's CPI DataIndia Retail Inflation
September 2026 · Combined CPI
5.54%
Year-on-year retail inflation, according to India's official CPI release for September 2026.
August 2026
4.82%
September 2026
5.54%
What changed?
The annual inflation rate increased by 0.72 percentage points between August and September. This does not mean the overall price level rose by 0.72% during September.
01
CPI Meaning
What Is The Consumer Price Index?
CPI measures changes over time in the retail prices of a selected basket of goods and services that households purchase for consumption.
Imagine A Representative Shopping Basket
Suppose a statistical basket represents the goods and services bought by households. The statistical agency tracks the prices of the selected items over time and combines them using assigned weights. CPI summarises how the cost of that basket changes.
Food
Vegetables, milk, cereals
Housing
Rent and housing services
Transport
Passenger transport and related costs
Services
Health, education and other services
Inflation Is The Rate Of Change
CPI is the index level. Inflation is commonly calculated as the percentage change in that index over a specified period, such as the same month a year earlier.
Different Households Feel It Differently
A family that spends a large share of its income on food may experience a different personal cost increase from a household spending more on rent, travel or other services.
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02
Inside The Basket
What Does India's CPI Cover?
The index combines prices from multiple consumption categories rather than relying on the price of just one product.
Food And Beverages
Cereals, vegetables, milk, eggs and meals
Housing And Utilities
Rent, housing services, electricity and fuels
Transport
Personal transport and passenger transport services
Education
Education services and related expenses
Health
Medicines, health products and health services
Clothing And Other Goods
Clothing, footwear, household items and personal goods
Why Are Some Items More Important Than Others?
CPI uses weights to represent the relative importance of categories in household consumption. A price change in a heavily weighted category can have a larger effect on the overall index than the same percentage change in a low-weighted category.
India's CPI series was revised to a 2024 base, using the updated consumption framework. The item basket, weights and methodology matter when comparing data across different CPI series.
Visit MoSPI's CPI Page03
Calculation
How Is CPI Calculated?
The calculation compares the cost of a representative basket across two periods, using the appropriate index methodology and weights.
Simplified Basket-Cost Formula
CPI = (Cost Of Basket In Current Period ÷ Cost Of Basket In Base Period) × 100
Year-On-Year Inflation Formula
Inflation Rate = [(Current Month CPI − CPI Same Month Last Year) ÷ CPI Same Month Last Year] × 100
Example: How A Basket's CPI Changes
Imagine a simplified basket costs ₹10,000 in the base period and ₹11,000 in the current period. This illustration assumes the same basket and quantities are used in both periods.
Base-Period Basket
₹10,000
Current-Period Basket
₹11,000
Simplified CPI Calculation
(₹11,000 ÷ ₹10,000) × 100 = 110
The index is 110 when the base-period index is 100. In this simplified example, the basket costs 10% more than in the base period.
Example: How to Calculate the Inflation Rate
Suppose the CPI was 105 in September last year and rises to 110 in September this year. How much have consumer prices increased over the year?
CPI One Year Ago
105
Previous September
CPI This Year
110
Current September
Apply the Year-On-Year Formula
[(110 − 105) ÷ 105] × 100
= (5 ÷ 105) × 100
= 4.76%
Inflation Rate = 4.76%
Consumer prices are approximately 4.76% higher than they were in the same month last year, according to these illustrative CPI values.
This is an illustrative example, not actual official monthly CPI data. The year-on-year inflation rate uses the CPI for the current month and the same month one year earlier.
How Official Inflation Is Calculated
The official inflation rate for a month usually compares its CPI with the CPI for the same month one year earlier. Do not confuse the index level with the inflation rate: an index of 110 does not automatically mean annual inflation is 10%.
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04
India CPI Data
India's Monthly Retail Inflation In 2026
The following year-on-year combined CPI inflation rates use India's revised CPI series with base year 2024=100. The September release is the latest available in this article as of 23 October 2026.
January 2026
2.74%
Year-on-year combined CPI inflation
May 2026
3.93%
Year-on-year combined CPI inflation
September 2026
5.54%
Latest published year-on-year combined CPI inflation
Monthly Inflation Trend
Annual percentage change in the combined Consumer Price Index, January–September 2026.
Unit: % year-on-year
2.74%
Jan
3.21%
Feb
3.40%
Mar
3.48%
Apr
3.93%
May
4.39%
Jun
4.45%
Jul
4.82%
Aug
5.54%
Sep
January–August
September
| Month | CPI Inflation | Change From Previous Month's Rate |
|---|---|---|
| January 2026 | 2.74% | — |
| February 2026 | 3.21% | +0.47 percentage points |
| March 2026 | 3.40% | +0.19 percentage points |
| April 2026 | 3.48% | +0.08 percentage points |
| May 2026 | 3.93% | +0.45 percentage points |
| June 2026 | 4.39% | +0.46 percentage points |
| July 2026 | 4.45% | +0.06 percentage points |
| August 2026 | 4.82% | +0.37 percentage points |
| September 2026 | 5.54% | +0.72 percentage points |
How Should You Read This Trend?
The year-on-year rate increased from 2.74% in January to 5.54% in September. This means the annual pace of consumer-price increases became faster over that period. It does not mean prices rose by 2.80% between January and September, nor does it mean every product rose by 5.54%.
Note On Data And Base Year
India introduced a revised CPI series with base year 2024=100 in 2026. These monthly figures belong to that series. Do not directly splice them with the previous 2012-base series as though the basket and methodology were unchanged. The latest September figure was provisional when released.
Source: Government of India, Ministry of Statistics and Programme Implementation (MoSPI), CPI releases and eSankhyiki data catalogue. Check the linked official release for revisions, methodology and the exact published figures.
05
Interpreting CPI
What Does A High Or Low CPI Mean?
The Consumer Price Index (CPI) measures the cost of a representative basket of goods and services relative to a base period. A higher CPI means the basket costs more than in the base period; a lower CPI means it costs less relative to that same base.
When CPI Is High
A high CPI index means the representative basket of goods and services costs substantially more than it did in the base period. Households may need to spend more money to maintain the same consumption pattern.
Example
Suppose the base-period basket cost ₹10,000 when CPI was 100. If the CPI later reaches 150, the equivalent basket costs approximately ₹15,000.
CPI = 150
Basket cost: ₹15,000 — 50% higher than in the base period.
When CPI Is Low
A low CPI index means the representative basket costs less relative to the base period than a basket with a higher index. However, a low CPI does not automatically mean that prices are currently falling or that every item is inexpensive.
Example
Suppose the base-period basket cost ₹10,000 when CPI was 100. If the CPI is 90 in a comparison period, the equivalent basket costs approximately ₹9,000.
CPI = 90
Basket cost: ₹9,000 — 10% lower than in the base period.
Important: CPI Level Is Not The Same As CPI Inflation
CPI tells us how the basket's cost compares with the base period. CPI inflation tells us the percentage change in the CPI over a specified period, commonly the same month of the previous year.
CPI Index
CPI increases from 100 to 150.
Basket cost is 50% higher than in the base period.
CPI Inflation
CPI rises from 145 last year to 150 this year.
Year-on-year inflation is approximately 3.45%.
Therefore, a high CPI index can exist alongside low current inflation. The index reflects the accumulated difference from the base period, while inflation measures the change over a particular period.
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06
Family Budget
Why Is CPI Important For A Middle-Class Family?
CPI helps families understand changes in the cost of everyday living. When consumer prices rise or fall, the money needed for household expenses can change too.
What Happens When CPI Increases?
When the CPI rises, the representative basket of goods and services becomes more expensive relative to the base period. A family may need to spend more on groceries, transport, electricity and other regular expenses to maintain a similar lifestyle.
Monthly Budget Example
Earlier monthly expenses₹30,000
Illustrative increase of 5%+₹1,500
New monthly expenses₹31,500
If the family's salary stays the same, it has ₹1,500 less available each month for savings, education, healthcare or other needs.
What Happens When CPI Decreases?
A decrease in the CPI index means the representative basket costs less than in the comparison period. If household expenses actually fall, a family may have more money available for savings and other needs.
Monthly Budget Example
Earlier monthly expenses₹30,000
Illustrative decrease of 5%−₹1,500
New monthly expenses₹28,500
If income remains unchanged and the family's actual expenses fall, it has ₹1,500 more each month for savings, debt repayment or other purchases.
Why Should Families Pay Attention To CPI?
Plan Expenses
Estimate how changes in consumer prices may affect regular household spending.
Protect Savings
Understand why rising prices can reduce what the same salary can buy.
Make Decisions
Review spending priorities when everyday necessities become more expensive.
These are simplified examples assuming the family's personal expenses change by 5%. CPI is a broad average, so an individual family's actual expenses may change by a different amount. Also, a falling inflation rate does not necessarily mean the CPI index or household prices have decreased.
07
Why CPI Matters
Why Is CPI Important For Families, Businesses And The Economy?
CPI is useful because consumer prices influence real incomes, household decisions, business planning and economic policy.
Middle-Class Families
- Understand whether everyday expenses are rising.
- Plan food, rent, transport and education budgets.
- Compare salary increases with changes in living costs.
Businesses
- Estimate changes in household purchasing power.
- Review prices, salaries and operating budgets.
- Make better-informed inventory and investment plans.
States And Regions
- Compare rural and urban inflation.
- Identify categories creating local price pressure.
- Support analysis of regional living-cost differences.
Government And RBI
- Monitor inflation and overall price stability.
- Inform monetary and economic policy decisions.
- Track changes relevant to real incomes and allowances.
CPI And Monetary Policy
India's retail CPI is an important measure used to assess price stability. The Reserve Bank of India considers inflation alongside growth, demand, credit conditions and other economic indicators when making monetary-policy decisions. CPI is an important input, not the only factor in those decisions.
08
Limits Of CPI
Is CPI Alone Enough To Understand The Economy?
No. CPI is essential for understanding consumer inflation, but it does not measure every price, every household's experience or the entire economy.
What CPI Does Well
- • Tracks retail price changes across a representative basket.
- • Helps explain changes in household purchasing power.
- • Allows comparisons across periods and published regions.
- • Supports inflation analysis and policy decisions.
What CPI Does Not Tell Us By Itself
- • Whether every family's expenses changed by the same rate.
- • Whether wages and incomes are keeping pace.
- • Whether asset prices such as shares or houses are rising.
- • Whether the economy is growing, shrinking or creating enough jobs.
Which Other Indicators Should We Look At?
WPI
The Wholesale Price Index measures price movements at the wholesale level for covered goods.
Understand WPIWages And Employment
Help show whether people are earning more and whether jobs are available.
Food Inflation
Separates changes in food prices from the headline consumer inflation rate.
Interest Rates
Help explain borrowing costs, saving incentives and monetary conditions.
Regional CPI
Helps compare inflation rates across states and rural and urban areas.
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09
Regional Differences
Why Can CPI Differ Between Rural And Urban Areas?
Household spending patterns, price movements and living arrangements differ across locations. Official CPI statistics therefore report rural, urban and combined results.
Rural Areas
Food prices, local supply conditions, transport access and the composition of household spending can influence the rural inflation rate.
Urban Areas
Rent, services, commuting and urban consumption patterns can influence the urban inflation rate. The effect varies by location and by the category being measured.
Combined CPI
The combined measure brings rural and urban prices together using the official statistical methodology and weights. It provides a broad national view rather than a perfect measure of every local family's cost of living.
A Higher Regional Inflation Rate Does Not Automatically Mean That Region Is More Expensive
Inflation measures the rate of price change over time. A region with a lower inflation rate may still have higher absolute prices than a region with a higher inflation rate. To compare living costs, you also need information about actual price levels, household consumption and local incomes.
Explore Official State And Regional CPI Data10
Key Takeaways
What Should You Remember About CPI?
CPI is one of the most useful indicators for understanding retail inflation, but the rate must always be read in context.
CPI: Measures changes in retail prices across a representative basket of consumer goods and services.
Inflation rate: Usually expresses the percentage change in CPI compared with the same month a year earlier.
Rising inflation: Means prices are increasing faster relative to the comparison period.
Falling inflation: Usually means prices are still rising, but more slowly. It does not necessarily mean prices are falling.
Family budgets: Can experience different increases because each household buys a different mix of goods and services.
Economic decisions: CPI helps governments, businesses and the RBI understand retail price pressure, but it should be considered alongside other indicators.
Official data: Use the relevant MoSPI release and check the base year, reference month and whether figures are provisional or final.
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