<h2>Overview</h2> <p>In March 2026 the <span class="key-term" data-definition="Consumer Price Index — a measure of retail inflation that tracks price changes of a basket of goods and services; essential for GS3: Economy">CPI</span> rose to <strong>3.4%</strong>, marginally above February’s <strong>3.21%</strong>. Food inflation accelerated to <strong>3.87%</strong>. The rise comes after the Ministry of Statistics and Programme Implementation (<span class="key-term" data-definition="MoSPI — the nodal agency that publishes official statistics on price indices, GDP, and other macro‑economic indicators (GS3: Economy)">MoSPI</span>) shifted the CPI base year to 2024, replacing the 2012 base.</p> <h3>Key Developments</h3> <ul> <li>New CPI base year 2024 with a basket of <strong>358 items</strong> across 12 divisions, 43 groups, and 92 classes.</li> <li>Inclusion of rural house‑rent for the first time, improving coverage of rural consumption.</li> <li>Wholesale Price Index (<span class="key-term" data-definition="WPI — an index that records price changes at the wholesale level, excluding services; compiled by DPIIT (GS3: Economy)">WPI</span>) retains 2011‑12 as its base year and covers 697 items in three components: Primary Articles, Fuel & Power, and Manufactured Products.</li> <li>The <span class="key-term" data-definition="Index of Eight Core Industries (ICI) — a composite index tracking production of coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity; vital for GS3: Economy"> Index of Eight Core Industries</span> (ICI) grew <strong>2.3%</strong> (provisional) in February 2026.</li> </ul> <h3>Important Facts</h3> <p><strong>Inflation Mechanics</strong>: Inflation measures the rise in general price level, eroding purchasing power. Higher inflation reduces <span class="key-term" data-definition="Real interest rate — the nominal interest rate adjusted for inflation; a key indicator of the true return on savings (GS3: Economy)">real interest rate</span> (Real = Nominal – Inflation), discouraging savings.</p> <p><strong>CPI vs. WPI</strong>: CPI captures retail prices (including taxes) and services such as education, health, and transport, directly influencing the <span class="key-term" data-definition="Reserve Bank of India (RBI) — India's central bank responsible for monetary policy, interest rates, and financial stability (GS3: Economy)">RBI</span>'s policy decisions. WPI records wholesale prices of goods only; it omits services, so a rise in service costs lifts CPI but not WPI.</p> <p><strong>Weightage Differences</strong>: Food has a higher weight in CPI than in WPI, explaining why CPI‑based inflation often appears more volatile. The ICI’s component weights are: Petroleum Refinery Products (28.04%), Steel (17.92%), Electricity (19.85%), Coal (10.33%), Crude Oil (8.98%), Natural Gas (6.88%), Fertilizers (2.63%). These eight sectors constitute about <strong>40.27%</strong> of the Index of Industrial Production