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Food Inflation at 2.11%, RBI Focus to Remain on Liquidity and Trends
The change in the CPI base year has changed the way inflation data is measured, but it doesn't appear to have a major impact on RBI policy. According to the report, given the weak inflation trend, interest rates may remain stable in the coming quarters.
The change in the base year of the Consumer Price Index (CPI) has not made much impact on monetary policy. According to a report released by the Union Bank of India, the Reserve Bank of India (RBI) may keep its interest rates unchanged for the time being rather than making changes in the coming months.
According to the report, the inflation rate (headline CPI) in January 2026, based on the new base year 2023-24, was 2.75 percent, which is in line with estimates. Meanwhile, core inflation (which includes less volatile items like food and fuel) declined to 3.46 percent, which is better than the previous estimate.
The report further adds that though the change in the base year has made the data calculation method more accurate and comprehensive, there will be no major changes in the RBI's policy thinking immediately. The RBI's Monetary Policy Committee will not only keep an eye on the data of the annual rate of inflation, but the actual rate of inflation and future trends will also be closely monitored by the MPC of the RBI.
According to the data under the new base year, the decline in core CPI was primarily due to the reduction in the weight of gold CPI from 1.1 percent to 0.62 percent. Core inflation excluding gold increased to 2.91 percent, indicating that underlying inflation trends remain weak.
