---
title: "CPI Inflation: Definition, Basket & RBI Target"
description: "CPI inflation tracks retail price change in a household basket; India targets 4% ±2% under the RBI's flexible inflation framework. See how it differs from WPI."
url: "https://modeldiplomat.com/learn/glossary/consumer-price-index-inflation"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Consumer Price Index inflation measures the rate of change in retail prices of a fixed basket of goods and services consumed by households over a defined period.
- What is India's CPI inflation target and who sets it?
- How does CPI inflation differ from WPI inflation?
- What happens if CPI inflation breaches the tolerance band?
- Why is core CPI inflation watched separately from headline CPI?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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In April 2022, India's CPI inflation reached 7.79 percent, breaching the RBI's 6 percent upper tolerance band and prompting the Monetary Policy Committee to raise the repo rate by 250 basis points through February 2023.

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