How many ways does India measure inflation?

In early 2026, a news headline declared inflation under control at 2.75%, even as a steel wholesaler faced an 8.3% rise in input costs and onion prices had collapsed 48% from a year earlier. Nobody is lying; they are simply reporting different measures.

India publishes at least half a dozen inflation numbers every month. They answer different questions, and the one that gets quoted can flip a story from ‘cost-of-living crisis’ to ‘prices in check’. A single number cannot possibly capture the experience of a daily-wage labourer in Dharavi and a salaried homeowner in Gurgaon at the same time. So we need a menu, and we need to know what each dish is.

This entry lays out that menu.

The Consumer Price Index (CPI) combined is the all-retail-inflation number you hear most often. It measures the change in prices paid by households for a fixed basket of goods and services. Since 2016, the Reserve Bank of India has a legal mandate to keep this number at 4%, with a 2% to 6% tolerance band, using the repo rate (currently 5.25%) as its main tool.

The basket that produced India’s CPI for over a decade had 2012 as its base year. Here is how it broke down:

But in February 2026, the Ministry of Statistics and Programme Implementation launched a new Consumer Price Index series with base year 2024, built on the Household Consumption Expenditure Survey of 2023-24. Food and beverages fell from 45.86% to 36.75% of the basket as Indians now spend more on services. The basket grew from 299 to 358 items, adding e-commerce, telecom data and OTT subscriptions, and adopted the international COICOP classification.

The new base gave a headline inflation of 2.75% for January 2026. Under the old 2012 base, the December 2025 number was 1.3%. Same economy, two baskets, two very different stories. The basket matters.

The CFPI isolates food. It is constructed from ten of the twelve sub-groups of the CPI’s food and beverages component, omitting non-alcoholic beverages and prepared meals/snacks. Because food is the most volatile part of the basket and makes up a large share of spending for the poor, the CFPI is watched closely by policymakers and journalists.

In December 2025, the CFPI was at -2.7% year-on-year, meaning food prices on average were lower than a year earlier. But that average hid deep swings: onion prices had fallen 48.1%, while mustard oil was up 8.2%. Even within food, a single number is a blunt instrument.

The CFPI matters because for a household that spends half its income on food, a spike in vegetable prices is far more painful than an equivalent rise in, say, recreation costs. The headline CPI gives food a weight of 36.75% (new basket) but that is an economy-wide average; for the poorest, the effective weight can be 60% or more.

Core inflation excludes food and fuel from the CPI basket. These two components are volatile, swayed by monsoons, global crude oil prices, and other forces that the RBI’s repo rate cannot influence quickly. By stripping them out, core inflation reveals the persistent, demand-driven part of price rise.

In December 2025, core inflation stood at 4.6%, well above the headline 1.3% (old base). That gap shows: while food deflation was pulling the headline number down, underlying demand pressure in services and non-food goods was still humming. This is the number the Monetary Policy Committee studies most carefully when deciding whether to raise or cut the repo rate.

Core is not an official index; it is an analytical measure published alongside the CPI by the RBI and tracked by economists. It answers: ‘Where is the inflation trend once you ignore the weather and the oil price?’

Super-core goes a step further than core, excluding not just food and fuel but also gold and housing. Gold is a peculiar item, an asset as well as a consumption good, whose price can swing wildly based on global markets. In December 2025, gold inflation was 68.7% year-on-year. Including that in an index meant to capture underlying demand would be misleading. Housing is sticky: its weight in the CPI is based on rental equivalence, which changes slowly and is often controlled by regulation. Excluding both gives an even cleaner signal of the demand pressures that monetary policy can influence.

Super-core does not have a fixed basket like core; it is an analytical concept. It answers: ‘If we look only at goods and services whose prices respond to aggregate demand, what is the inflation rate?’ The answer, when it is published, is sometimes lower and occasionally higher than core, but it strips away the noise of items that are either too jumpy or too rigid.

The WPI measures prices at the wholesale or producer level for goods only. It contains no services at all, no doctor’s fee, no education, no rent. Its basket is dominated by manufactured products (about 64%), with primary articles (about 23%) and fuel and power (about 13%).

In April 2026, the WPI for all commodities was up 8.3% year-on-year, driven by a 24.7% jump in fuel and power. That is a very different picture from retail inflation. The WPI can lead CPI at times because wholesale price changes eventually pass through to consumers, but it can also mislead because it is heavily influenced by global commodity prices and does not capture the weight of services in the economy.

Before its shift to CPI, the RBI used WPI as its main inflation anchor. The switch was driven by the recognition that a modern economy’s price pressures should be measured at the retail level, where households actually feel them. The WPI is still published monthly by the Office of the Economic Adviser and is used by businesses and analysts to track the price pipeline.

Beyond fixed-exclusion measures like core, the RBI also publishes ‘limited-influence’ measures of underlying inflation. The trimmed mean drops the items with the most extreme price moves each month, the biggest risers and the biggest fallers, and then averages the rest. The weighted median takes the inflation rate of the single item that sits at the exact middle (by expenditure weight) of the distribution of price changes.

Unlike core, which always ignores the same items, these measures let the excluded set change from month to month. If onion prices spike 50% one month, the trimmed mean will automatically drop them; next month, if onion prices collapse and oil prices surge, it will drop a different set. This makes them robust against short-term supply shocks without any human judgment.

The RBI uses these as cross-checks: if core inflation is rising but the trimmed mean is not, the rise may be driven by a few items that the core exclusion did not catch. Conversely, if both move together, the signal is stronger.

The GDP deflator is the price change of everything an economy produces, not just consumer goods and services but also investment goods, government services, and exports. It is not built from a fixed basket; instead, it is derived by comparing nominal GDP (measured at current prices) to real GDP (measured at constant prices). If nominal GDP grows 10% and real GDP grows 7%, the deflator is roughly 3%.

Because it covers the whole economy, the deflator includes things like the price of a new wind turbine in Gujarat, or a kilometre of expressway, or the salaries of government school teachers, none of which appear in the CPI or WPI. This makes it the most comprehensive price measure, but it is released only quarterly with the national accounts and is less timely.

The deflator is the price index used to strip inflation out of GDP to get real growth. If you are reading a GDP growth figure of, say, 6.5%, that is real growth, meaning the deflator has already been applied. Watching the deflator tells you whether nominal growth is being driven by genuine quantity increases or just by higher prices.

The answer depends on your question.

• If you want to know how your cost of living is changing, start with headline CPI on the newest base. It is the closest approximation to a consumer’s experience, but remember it is an average. Your personal basket may be different.
• If food dominates your household budget, as it does for the poorest half of Indians, the CFPI or the food components of the CPI matter more.
• If you are trying to read the RBI’s mind, watch core and super-core inflation. These are the trends the Monetary Policy Committee uses to decide on interest rates.
• If you run a business and need to track input costs, the WPI gives you producer prices, but remember it contains no services and is driven heavily by global commodities.
• If you want to understand the whole economy’s price pressures, including investment and government, the GDP deflator is the broadest measure, though it arrives late.
• If you are a wonk who distrusts fixed exclusion lists, the trimmed mean and weighted median are robust alternatives that automatically filter out the most volatile items each month.

No single number is ‘the truth.’ Each is a lens that magnifies some things and blurs others. Knowing which lens to use is what matters.