Economists forecast stability in new index, see lower core inflation

INDIA’S FIRST CONSUMER price inflation reading underthe new 2024 base year series printed at 2.75% year-on-year.

- PRASANTA SAHU

Economists have highlighted smoother inflation and muted volatility despite sharp food and jewellery price swings.

The most consequential change is the sharp reduction in the weight of food and beverages — from 42.62% in the 2012 series to 36.75% in the new one.

The impact was visible in January: food inflation rose to about 2.1%, driven by items such as tomatoes and coconut oil, yet headline inflation stayed subdued because food now exerts less influence.

Bank of Baroda chief economist Madan Sabnavis noted that this adjustment matters because food prices are historically volatile and “have brought large shifts in the inflation numbers in the past,’adding that “this noise element gets reduced in the new index.”