Context: Retail Inflation
India’s retail inflation rose to 3.5% in April 2026 due to higher food prices and fuel-linked transportation costs. Retail inflation is measured through the Consumer Price Index (CPI).
Consumer Price Index (CPI)
- Measures change in prices paid by consumers for goods and services.
- Reflects retail/cost-of-living inflation.
- Released mainly by NSO under MoSPI.
- New Base Year: 2024 = 100.
- First CPI data on new base released in January 2026 → inflation at 2.75%.
Major CPI Types
- CPI Combined → Used by RBI for inflation targeting.
- CPI Rural
- CPI Urban
- CPI-IW (Industrial Workers) → Used for Dearness Allowance (DA) calculation for Central government employees and pensioners.
- CPI-AL → Agricultural Labourers.
- CPI-RL → Rural Labourers.
- CPI-IW, CPI-AL, and CPI-RL are released by the Labour Bureau under the Ministry of Labour & Employment.
CPI Used by RBI
- RBI uses CPI Combined under the Flexible Inflation Targeting (FIT) framework.
- Inflation target: 4% ± 2%.
- Introduced through amendments to the Reserve Bank of India Act, 1934 in 2016.
