India's Inflation Drops to 1.33%: What the New 2024-Base CPI Means for Your Budget

India's inflation rate has reached a historic low of 1.33% in December 2025, marking the last print of the 2012-base consumer price index (CPI) series. This milestone comes just before the launch of the new 2024-base CPI series by the Ministry of Statistics in January 2026. The change in the base year for the CPI reflects updated consumption patterns shaped by the post-pandemic economy. This shift will affect how economists, policy analysts, investors, and wage negotiators track inflation and adjust financial plans.

This article explores the implications of the December 2025: 1.33% CPI - last print of 2012-base series, the transition to the January 2026: NEW 2024-base CPI series launches (Ministry of Statistics), and what these changes mean for your budget and economic decisions.

Understanding the Historic Low Inflation of 1.33% in December 2025

The India inflation 1.33 percent December 2025 figure is notable for several reasons. It represents the lowest inflation rate recorded under the 2012-base CPI series, which has been in use for over a decade. This low inflation rate is partly due to food deflation for the 7th consecutive month, with prices falling by -2.71% in December. Food prices have a significant weight in the CPI basket, so sustained deflation in this category has a strong impact on overall inflation.

For three straight months, inflation has remained below the RBI 2-6% tolerance band, signaling a period of subdued price pressures. This trend is unusual given India's typical inflation volatility and has important consequences for monetary policy and financial markets.

What the New 2024-Base CPI Series Means

Starting January 2026, the Ministry of Statistics will launch the new 2024-base CPI series. This update changes the reference year for the CPI calculation from 2012 to 2024, incorporating a more recent and relevant consumption basket. The new basket reflects updated consumption patterns shaped by the post-pandemic economy, including shifts in spending on services, digital goods, and lifestyle changes.

Key changes in the new CPI include:

• Inclusion of new goods and services that have become common since 2012.

• Adjusted weights for categories like housing, healthcare, and personal care.

• Recognition of changing consumer behavior, such as increased online shopping and altered food consumption.

  
  

This recalibration will affect how inflation is measured and interpreted. For example, some categories like "personal care" inflation have risen, partly due to surges in gold and silver prices, which are now more prominent in the consumption basket.

Impact on Policy and Financial Instruments

The Reserve Bank of India (RBI) will use the new CPI data in its February 6 MPC meeting, making this update critical for monetary policy decisions. The RBI’s inflation target band of 2-6% will now be assessed against the 2024-base CPI, which may show different inflation dynamics compared to the old series.

For investors and wage negotiators, the new CPI base year means recalibration of inflation-indexed instruments such as bonds, wages, and pensions. These instruments rely on accurate inflation data to maintain real value over time. The updated CPI will provide a more accurate reflection of current inflation pressures, helping to better protect purchasing power.

What Economists and Analysts Should Watch

Economists and policy analysts should pay close attention to:

• How the new CPI series changes inflation trends compared to the 2012-base series.

• The impact of food deflation continuing beyond seven months and its influence on overall inflation.

• The effect of gold and silver surges pushing "personal care" inflation higher.

• The RBI’s response to inflation readings that have been below the RBI 2-6% tolerance band for three straight months.

• The implications for fiscal policy, wage negotiations, and social security payments indexed to inflation.

  
  

Practical Implications for Salary Negotiators and Pensioners

Salary negotiators often use CPI data to argue for wage adjustments that keep pace with inflation. The transition to the CPI new base year 2024 means they will need to understand how the updated consumption basket affects inflation readings. For example, if the new CPI shows higher inflation in categories relevant to workers’ expenses, it could strengthen the case for wage increases.

Pensioners whose payments are linked to inflation will also see changes. The recalibrated CPI will influence pension adjustments, potentially altering the real value of pension income. Staying informed about the new CPI series will help pensioners and their advisors plan better.

Inflation-Linked Bond Investors Should Take Note

Investors in inflation-indexed bonds must adjust their expectations based on the new CPI data. The consumer price index India change with the 2024 base year may affect bond yields and real returns. Understanding the new inflation dynamics will help investors make informed decisions about portfolio allocation and risk management.

Summary of Key Points

• India inflation 1.33 percent December 2025 marks the lowest inflation under the 2012-base CPI series.

• The January 2026: NEW 2024-base CPI series launches (Ministry of Statistics) with an updated consumption basket.

• Food prices have seen deflation for 7 consecutive months (-2.71% in December), contributing to low inflation.

• Inflation has remained below the RBI 2-6% tolerance band for 3 straight months.

• The RBI will use the new CPI data in its February 6 MPC meeting.

• Inflation-indexed instruments like bonds, wages, and pensions will be recalibrated based on the new CPI.

• Surges in gold and silver prices have pushed "personal care" inflation higher.

• Economists, investors, negotiators, and pensioners must adapt to the new inflation measurement framework.

  
  

Understanding these changes will help you better track expenses, negotiate wages, and manage investments in a shifting economic landscape. The new CPI base year offers a clearer picture of inflation in today's India, making it a vital tool for economic decision-making.