Finance & Economics · Perspective · Established
Two years ago, a 5 kg bag of rice cost ₹250. Last year it cost ₹300. You noticed. The news said inflation was 20%.
This year the news says inflation has fallen to 2%. You go to the shop. The rice costs ₹306.
The news said “fallen”. The shop said “higher”. This is a simplified example, not real price data.
| |
What the news said |
What you saw at the shop |
| Last year |
Inflation: 20% |
Rice rose from ₹250 to ₹300 |
| This year |
Inflation fell to 2% |
Rice rose again, from ₹300 to ₹306 |
This piece uses that one bag of rice to explain the gap, then shows why your own bill may differ from the national number. It does not judge any government or agency.
“Fallen” describes the size of the rise, not the price
Inflation [how fast prices are rising over a stated period] is a measure of how much prices went up. It is not the price itself.
A fall from 20% to 2% means the rice rose by less this year than last year. It did not get cheaper. The ₹50 rise from last year is still in the price. Nothing in the 2% takes it back.
Each year’s figure compares the price with a year earlier. This year’s 2% is worked out on last year’s ₹300, not on the original ₹250. So the news can say “fallen” while the shop keeps getting dearer.
The rice would get cheaper only if this year’s price fell below last year’s ₹300. That would mean its inflation had turned negative.
The national number is an average, not your list
The rice here is one item. The national number covers many.
India’s Consumer Price Index (CPI) follows a long list of things households buy: food, fuel, rent, school fees. Economists call this list a basket. Each item carries a weight [its share of the overall figure], based on how households spend. India’s statistics ministry takes its current weights from a household spending survey for 2023–24.
Food and beverages carry about 37 out of 100 across the country. In rural India they carry about 42, in urban India about 30. The same food price rise may therefore weigh differently on a rural and an urban household.
Some items can get cheaper while the average still rises. In January 2026, onions and garlic did. The ministry’s figures put them down about 29% and 53% on a year earlier, while overall inflation was 2.74%.
The national number describes an average across the whole basket. It was not built to describe one family, whose spending pattern can differ.
The news reports the inflation percentage. The shop shows where you stand.
In short: When inflation falls but stays above zero, prices are still rising on average, only more slowly. The number is also an average, so it may not match your own bills.
Glossary
| Term |
Plain definition |
| Inflation |
How fast prices are rising over a stated period. It is not the price itself |
| CPI (Consumer Price Index) |
The measure that tracks retail prices of goods and services households buy |
| Basket |
The long list of goods and services whose prices are followed to calculate inflation |
| Weight |
The share of the overall figure that one item in the basket carries |
Sources
