Why in News?
The Ministry of Statistics and Programme Implementation (MoSPI) has released a New CPI Series (Consumer Price Index) with 2024 as base year. Retail inflation for January 2026 under the new series stood at 2.75%.
Description:
About Consumer Price Index (CPI):
- Measures retail inflation (price changes at consumer level).
- Used by the RBI for monetary policy (inflation targeting) and by the Government for indexation (DA, wages, etc.).
- RBI’s inflation target: 4% ± 2% (2–6%) under the Monetary Policy Framework.
The Shift: 2012 vs. 2024 Base:
| Feature | Old Series (2012) | New Series (2024) |
| By | MoSPI | MoSPI |
| Data Source | CES 2011-12 | HCES 2023-24 |
| Total Items | 299 | 358 (Goods: 308; Services: 50) |
| Food & Bev. Weight | 45.86% | 36.75% (Significant Drop) |
| Housing Weight | ~10% | 17.67% (Significant Rise) |
| Classification | 6 Broad Groups | 12 Divisions (COICOP 2018) |
CES (2011–12) – Consumer Expenditure Survey, HCES (2023–24) – Household Consumption Expenditure Survey
Key Highlights:
- COICOP Alignment: Conforms to Classification of Individual Consumption According to Purpose (2018) (UN standard). It improves global comparability of India’s inflation data.
- Rural Housing Included: House Rent added for rural areas; earlier, Housing group covered only urban.
- Transport & Digital Update: “Transport & Communication” split; new items include OTT subscriptions, smartphones, internet data packs reflecting digital consumption shift.
Why the Weightages Shifted?
- As per Engel’s Law, as household income increases, the percentage of income spent on food decreases, while spending on “luxuries” and services (health, education, entertainment) increases.
- The HCES 2023-24 confirmed that Indians are spending less on cereals and more on processed foods, eggs, fish, and services.
Comparison: CPI vs. WPI:
| Feature | CPI (Retail) | WPI (Wholesale) |
| Released by | NSO (MoSPI) | Office of Economic Adviser (DPIIT) |
| Components | Goods & Services | Goods Only |
| Base Year | 2024 | 2011-12 (Revision Pending) |
| Weightage | Food is highest (~36%) | Manufactured Goods highest (~64%) |
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