One change, two speeds.
Year-on-year cancels the seasons and moves slowly. Month-on-month is fast and mostly noise. When each is the right tool, and why three consecutive months is the minimum unit of meaning.
The charts on this page draw the consumer price index on its 2012 base, the series that ran to December 2025. From January 2026 the NSO publishes the index on a new base, 2024 = 100. The idea on this page works the same on either ruler; the latest figures are in the Consumer prices guide.
The word, defined twice
First principlesThe same change can be measured against two different pasts. Compare a month with the same month a year ago and you get the year-on-year rate, the form in which inflation reaches the news. Compare it with the month just gone and you get the month-on-month rate, the form in which inflation reaches the trading desk. One measure is slow and clean. The other is fast and dirty.
The trade-off cannot be engineered away. To remove the seasons you must wait a year for a like-for-like comparison; to be fast you must accept the seasons as static. Statisticians in some countries adjust the monthly data for seasonality and get a cleaner fast measure. India's published CPI carries no such adjustment, so the raw monthly change is noisier here than in most rich countries.
Five years, heard at two speeds
y/y %, m/m %The signal and the noise: one index, two measures of change
The blue line is the year-on-year rate; the thin grey line is the month-on-month change, computed from the same index. Watch how differently they behave. The grey line changes sign – times in five years. The blue line never crosses zero once.
That is the seasons leaving the grey line and cancelling from the blue one. Vegetables flood the winter market and the grey line dips; the summer heat lifts them and it jumps. The blue line compares each month with its twin a year back, so the calendar cancels and only real change remains.
In July 2023 a tomato shock hit: the grey line jumped – in a single month, the largest monthly move in the window. A reader of the fast measure knew within weeks that something had happened. A reader of the slow measure watched the year-on-year line climb to – and learned, a few months later, how large the something was.
Neither reader was wrong. The fast measure caught the event; the slow measure sized it. The mistake is asking one line to do the other's job.
The minimum unit of meaning
A working rule, three monthsSo how much speed can you trust? A working rule: one monthly print is weather, and three consecutive prints pointing the same way are the beginning of a climate. The rule exists because of what the numbers block shows. In five years the fast line flips direction – times; treating any single flip as news would have meant crying turn, on average, once a quarter.
Used together, the two measures are a sequence, not a contest. The monthly line is the smoke alarm: quick to sound, often wrong, worth hearing. The yearly line is the verdict: slow, calm, and the only number the RBI's target actually applies to.
How to misread this concept
- i.
“One month tells a story.”
One month tells an event. The monthly line in this window dips below zero in – of sixty months, and in every one of those months the basket still cost more than a year earlier. A story needs three consecutive months, minimum.
- ii.
“y/y hides what happened in a single month.”
It does, deliberately. The present month's move enters the year-on-year rate diluted by eleven others, which is the price of cancelling Diwali and the monsoon. When you genuinely need speed, the monthly line exists. Refuse to read it alone.
- iii.
“m/m is the honest measure.”
It is the fast measure, which is not the same thing. An unadjusted monthly change compares two different seasons and reports the difference as news. Honesty has nothing to do with frequency. It is about knowing what your comparison actually contains, month after month.