India’s Retail Inflation Rises To 3.21% In February as Food, Housing Costs Increase

India’s retail inflation rose to 3.21% in February, according to provisional data released by the Ministry of Statistics and Programme Implementation. The increase was driven by higher prices of food and beverages, clothing, housing and utility services.

The February reading was higher than January’s 2.75%, which marked the first official print under the new Consumer Price Index (CPI) series with 2024 as the base year.

CPI Reset Changes How Inflation is Measured

The revised CPI index reflects updated household spending patterns based on the 2023–24 Household Consumption Expenditure Survey.

One of the biggest changes involves the recalibration of weights assigned to different consumption categories.

Under the new series:

• The weight of food and beverages has declined significantly from 45.86% to 36.75%.
• The share of core inflation components, such as housing and services, has increased.

Economists estimate that these adjustments could slightly lift headline inflation readings, as core items have recorded relatively firmer price trends in recent months.

The revised structure is expected to reduce the volatility of headline inflation, since food prices tend to fluctuate sharply due to seasonal factors.

Inflation Remains Within RBI’s Target Range

Despite the February increase, retail inflation remains comfortably within the 2–6% target range set by the Reserve Bank of India.

Inflation has stayed near the lower end of the target band in six of the past seven months, supported by a sharp moderation in food prices.

From June 2025 onwards, food inflation turned negative, meaning prices were lower than the previous year. This pushed headline CPI inflation to a historic low of 0.25% in October 2025, alongside record-low food inflation of –5.02%.

However, global developments continue to pose risks. Disruptions in West Asia affecting oil, gas and commodity prices could influence inflation trends in the coming months.

Read more: Flipkart IPO Plans Take Shape as Walmart-Backed E-Commerce Giant Prepares to Invite Banks.

Conclusion

India’s February retail inflation reading of 3.21% reflects a modest rise in prices of food, clothing and housing, but remains well within the central bank’s target band.

The introduction of the new CPI series with a 2024 base year is expected to provide policymakers with a more accurate picture of consumption patterns and price trends.

By reducing the weight of volatile food items and improving the measurement of housing costs, the revised index could make inflation readings more stable and reliable, helping policymakers assess economic conditions more effectively in the months ahead.

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