The Statistics Ministry on Thursday revealed a new Consumer Price Index (CPI) series, with 2024 now set as the base year, replacing 2012. The revision aims to refine inflation measurement. As the Reserve Bank of India (RBI)'s main tool for tracking price changes, the CPI remains a cornerstone of monetary policy and interest rate strategy.
This revision represents the first comprehensive overhaul of India's inflation measurement in more than 10 years, bringing official data in line with contemporary household spending habits. Drawing on insights from the Household Consumption Expenditure Survey (HCES) 2023‑24, the update captures the economy's shift toward services, digital payments, and more varied consumption.
Serving as a key barometer of living costs, the CPI monitors changes in the prices of goods and services consumed by households. The base year serves as the benchmark for these changes, with its index set at 100.
To keep the index reflective of changing household spending habits, the base year is updated periodically. The latest series sets 2024 as the reference year, with item weights derived from the HCES 2023‑24.
The updated weights mirror shifts in household spending. Food and beverages now account for 36.75% of the index, down from 45.86%, while categories such as transport and communication, housing and utilities, and personal care have seen their shares rise.
India's revised CPI basket has grown to 358 items, comprising 308 goods and 50 services, up from 299 in the older series. The items are arranged across 12 divisions, 43 groups, and 92 classes. Price monitoring now covers 1,465 rural and 1,395 urban markets, expanding from 1,181 and 1,114, respectively.
Modern additions include AirPods, OTT subscriptions, air purifiers, hand sanitisers, e‑commerce purchases, and international flights, while obsolete items such as library fees, radio charges, and horse‑cart fares have been dropped.
However, about 98% of the basket remains consistent with the previous series. Authorities have published detailed CPI data, including indices for individual states and sectors across all categories.
To more accurately represent digital shopping patterns, the CPI now factors in prices from 12 online marketplaces in major cities with populations over 2.5 million. Items distributed free under government schemes, such as foodgrains through the Public Distribution System, are excluded, as the index measures household expenditure rather than total consumption.
Prices for several services will now be collected directly from official or digital sources, including airline websites for airfares, OTT platforms for subscription rates, telecom operators for mobile tariffs, India Post for postal charges, and the ministry database for fuel prices.
In future, the base year is set to be revised on a five-year cycle to keep pace with economic developments, with the Household Consumption Expenditure Survey conducted once every three years.
Also Read: CPI Revision Will Make Better Government Policy, Help Businesses, Says MoSPI Secretary
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