New CPI Series Scrambles State Inflation Rankings, Telangana Tops January List
Revised 2024 base year, fresh consumption weights, and expanded market coverage reshape the inflation map
India’s revamped Consumer Price Index (CPI), rebased to 2024, has dramatically reshuffled state inflation rankings for January 2026—altering not just positions, but the shape of the inflation curve itself.
With updated weights, a rebuilt market frame, and reclassification under COICOP 2018, the new series presents a different inflation geography.
Telangana Jumps to the Top
Telangana now posts the highest inflation rate at 4.92% in January 2026.
Under the older 2012 series, it ranked 13th in December 2025.
Other notable shifts:
- Kerala slips from first to second at 3.67%
- Tamil Nadu rises from sixth to third at 3.36%
- Rajasthan surges from 26th to fourth at 3.17%
At the other end, Manipur records the lowest inflation at 0.12%, down from 2.08% and 11th position in December.
The recalibration has compressed extremes. The highest state inflation rate is now 4.92%, compared with 9.49% (Kerala) under the old series in December. Crucially, no state is in deflation—a sharp contrast to December, when nine states posted negative inflation.
Why the Rankings Changed
The Expert Group outlines three structural shifts behind the reordering.
1. New Consumption Weights
The CPI now draws from the Household Consumption Expenditure Survey (HCES) 2023–24.
States such as Telangana, Tamil Nadu, and Karnataka show higher spending shares on:
- Services
- Housing
- Telecom
- Fuel
- Online purchases
These categories have seen relatively faster price increases. With greater weight assigned to them, headline inflation rises correspondingly.
2. Expanded Market Coverage
The urban sampling frame has widened, particularly in fast-urbanising states.
More markets in peri-urban areas and smaller towns are now included. Earlier CPI rounds were often anchored in a limited set of cities—especially in states like Telangana and Rajasthan.
3. Re-engineered Item Structure
The index now aligns with COICOP 2018.
Changes include:
- Splitting items (e.g., clothing types, telecom services, education levels)
- Clubbing others
- Cleaning up broad “other” categories
In effect, the CPI has shifted from a coarse lens to a sharper, more granular view.
Experts Flag Sample-Size Risks
P C Mohanan, member and former acting chairman of the National Statistical Commission, cautions that state-level estimates can be volatile.
At the state level, item-wise sample sizes are smaller. That thinness can introduce noise and produce outliers.
He cites Kerala’s shift—from nearly 10% inflation in December to under 4% now—as an example of how state weighting diagrams may lack the robustness of national aggregates.
Bigger Policy Implications
For policymakers and investors, the reset matters.
A structurally less volatile CPI—if it holds—could influence rate expectations and state-level fiscal planning. But it also raises a fundamental question: are states experiencing different inflation, or are we simply measuring it better?
As with any statistical overhaul, interpretation will take time.
TL;DR:
India’s new 2024-based CPI series has reshuffled state inflation rankings. Telangana now tops January at 4.92%, while no state is in deflation. Revised consumption weights, expanded market coverage, and new classification standards explain the dramatic shifts.
AI summary:
- CPI rebased to 2024 changes state rankings.
- Telangana highest at 4.92%; Manipur lowest at 0.12%.
- No state in deflation under new series.
- New weights reflect updated consumption patterns.
- Experts warn of state-level sample volatility.
