India measures inflation mainly through two indices. The consumer price index (CPI) tracks the retail prices households pay for a basket of goods and services. The wholesale price index (WPI) tracks prices of goods at the first point of bulk sale: the factory gate, the mine or the mandi. The CPI is the one that matters most for policy, because it is what the Reserve Bank of India (RBI) targets. In August 2026 the two diverged sharply: CPI inflation was 4.82%, while WPI inflation was 9.92%.
What the CPI measures
The CPI is compiled by the National Statistics Office under the Ministry of Statistics and Programme Implementation (MoSPI). Since February 2026 it uses a new base year, 2024 = 100, replacing the 2012 series, according to MoSPI’s first release on the new base.
Key features of the current series, per MoSPI:
- Weights come from the Household Consumption Expenditure Survey 2023-24, so the basket reflects what households actually spent in that year.
- 358 items: 308 goods and 50 services, up from 299 items in the old series.
- 12 divisions under the UN’s COICOP 2018 classification, replacing the old six groups.
- Food and beverages carry a 36.75% weight, down from 45.86% in the 2012 series. Housing, water, electricity, gas and other fuels carry 17.67%, and transport 8.80%.
- Prices are collected from 1,407 urban markets (including online markets) and 1,465 villages.
MoSPI publishes rural, urban and combined indices; the “headline” number is the combined index.
What the WPI measures
The WPI is compiled by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade (DPIIT). Its current series uses 2022-23 as the base year, matching the new GDP series, according to the Office’s FAQ on the new series.
Key features, per the Office of the Economic Adviser:
- 957 items, up from 697, with 15,254 price quotations.
- Goods only. The WPI does not cover services.
- Three major groups: primary articles (22.76% weight), fuel and power (14.11%) and manufactured products (63.13%), according to the August 2026 release.
- Weights are based on the gross value of output, a producer’s view of the economy, not on household spending.
- Prices are ex-factory for manufactured goods, mandi prices for farm produce and ex-mine prices for minerals.
Since the 2026 revision, the Office also publishes an output producer price index and a trial input producer price index alongside the WPI. These cover the prices producers receive and pay, and feed into the GDP calculations.
CPI vs WPI at a glance
| CPI | WPI | |
|---|---|---|
| Publisher | NSO, MoSPI | Office of the Economic Adviser, DPIIT |
| Current base year | 2024 = 100 | 2022-23 = 100 |
| What it prices | Retail prices paid by households | First-stage bulk prices: factory gate, mandi, mine |
| Services covered? | Yes (50 service items) | No |
| Number of items | 358 | 957 |
| Weight basis | Household spending (HCES 2023-24) | Gross value of output |
| Food weight | 36.75% (food and beverages) | 24.99% (WPI Food Index) |
| Monthly release | Around the 12th–14th of the following month | 14th of the following month (or next working day) |
| August 2026 inflation | 4.82% | 9.92% |
| Key uses | RBI’s inflation target, GDP deflation | GDP deflation, indexation in business contracts, early warning of input costs |
Why CPI and WPI diverge
The Office of the Economic Adviser’s FAQ lists several reasons the two indices move apart. In plain terms:
Different baskets. CPI includes services such as rent, education, health and transport fares, which the WPI leaves out. The WPI is heavy in intermediate goods such as metals, chemicals and fuels that households never buy directly.
Different weights. Food matters much more to household budgets than to the WPI, while fuels and industrial inputs matter more to the WPI.
Global prices. Many WPI items, especially crude oil products and metals, are traded internationally, so the WPI reacts quickly to global price swings. The CPI’s services component is largely non-tradable and moves more slowly.
Lags. Wholesale price changes often take time to pass through to retail prices, and some are absorbed by margins along the way.
August 2026 is a clear example. WPI inflation of 9.92% was driven by fuel and power, where wholesale prices were up 22.93% on the year, along with food articles and basic metals, according to the Office of the Economic Adviser. Mineral oils alone carry an 8.19% weight in the WPI. Retail inflation rose too, but to a much lower 4.82%, because the CPI basket is dominated by food and services. The gap was also widened by base effects: the Office’s own chart shows WPI inflation close to or below zero in late 2025, which makes this year’s year-on-year comparison look larger.
Which one does the RBI target?
The RBI targets headline CPI inflation. Under the flexible inflation targeting framework, the target is 4%, with a tolerance band of 2% to 6%. On 25 March 2026 the government retained this target for the five years from 1 April 2026 to 31 March 2031, according to the RBI. The RBI is deemed to have failed if average inflation stays above 6% or below 2% for three consecutive quarters.
The CPI is the index closest to the prices people actually pay. The WPI still matters to the RBI as an early signal of cost pressure building up the supply chain.
At its August 2026 meeting, the Monetary Policy Committee kept the repo rate at 5.25% and projected CPI inflation of 5.0% for 2026-27, according to the RBI’s policy statement of 5 August 2026. Its next decision is due on 7 October 2026. Our explainer on the repo rate shows how these decisions reach your loan EMI.
Headline vs core inflation
Headline inflation is the change in the full CPI basket. Core inflation strips out food and fuel, the two most volatile components, to show underlying price pressure.
India does not publish an official core CPI number. Economists and the RBI compute it themselves. The RBI’s August 2026 statement projected core inflation of 4.3% for 2026-27. For August 2026, BNP Paribas estimated core inflation at 4.3%, up from 3.3% in March, according to Business Today.
Why it matters: if headline inflation rises because of a vegetable price spike, the RBI may look through it. If core inflation is also rising, price pressure is spreading, and that is harder to ignore.
Food inflation
Food is the single largest part of the CPI, and it is volatile. MoSPI tracks it through the Consumer Food Price Index (CFPI). In July 2026, CFPI inflation was 5.52%, according to MoSPI. In August it rose to 5.95%, with rural food inflation at 6.13% and urban at 5.64%, according to Business Today’s report of the MoSPI data. Onion prices were up 48.27% and ginger 73.82% on the year, while tomato and potato prices fell.
The WPI has its own Food Index, combining food articles and manufactured food products, with a 24.99% weight. It showed 7.05% inflation in August 2026.
The latest prints
| Measure | July 2026 | August 2026 |
|---|---|---|
| CPI (combined, base 2024) | 4.45% | 4.82% |
| CPI rural / urban | 4.84% / 3.96% | 5.23% / 4.31% |
| Consumer Food Price Index | 5.52% | 5.95% |
| WPI (base 2022-23) | 9.78% | 9.92% |
| WPI primary articles | 8.52% | 7.76% |
| WPI fuel and power | 20.05% | 22.93% |
| WPI manufactured products | 8.29% | 8.37% |
August CPI figures are provisional; WPI figures are provisional and are finalised two months later. September WPI is due on 14 October 2026.
Both price indices also feed into GDP: MoSPI uses them to convert nominal output into real output. Our guide on how to read India’s GDP numbers shows how.
The point: CPI measures what households pay; WPI measures what producers charge at the first sale. The RBI targets CPI at 4%, within a 2–6% band, so CPI drives interest-rate decisions. A wide gap, like August 2026’s 4.82% versus 9.92%, usually signals fuel or commodity shocks that may or may not reach shop shelves, which is why core and food inflation are worth watching too.
Sources
- First Press Release of Consumer Price Index on Base 2024=100 (January 2026), MoSPI, 12 February 2026
- Press Release of Consumer Price Index on Base 2024=100 for July 2026, MoSPI, 12 August 2026
- Provisional Estimates of WPI, Output PPI and Trial Input PPI for August 2026, Office of the Economic Adviser, DPIIT, 14 September 2026
- FAQs on New Series of Wholesale Price Index (Base Year 2022-23), Office of the Economic Adviser, DPIIT
- Monetary Policy Statement, 2026-27: Resolution of the Monetary Policy Committee, August 2026, Reserve Bank of India, 5 August 2026
- Monetary Policy Framework: Overview, Reserve Bank of India
- Retail inflation climbs to 4.82% in August as food prices rise, Business Today, 14 September 2026
- India inflation hits 4.8% as price pressures broaden beyond food and fuel, Business Today, 29 September 2026