Context
Recently, the Ministry of Statistics and Programme Implementation (MoSPI) released the first set of retail inflation data under the new Consumer Price Index (CPI) series with 2024 as the base year.
This major statistical overhaul, replaces the decade-old 2012 series to better reflect contemporary Indian consumption patterns, characterized by increased spending on services, digital products, and a relative decline in the share of food expenditure.
New CPI Series (Base 2024)
1. Shift in Base Year and Data Source
- New Base Year: The base year has been officially shifted from 2012 to 2024.
- Primary Data Source: The weights for the new series are derived from the Household Consumption Expenditure Survey (HCES) 2023-24.
2. Adoption of International Framework (COICOP 2018)
- The new series moves away from the older structure of 6 broad groups to 12 Divisions based on the UN’s Classification of Individual Consumption According to Purpose (COICOP) 2018.
- This alignment enhances the global comparability of India’s inflation data.
3. Changes in the Consumption Basket
- Expansion of Items: The total number of items in the basket has increased from 299 to 358.
- New Additions: Reflecting a modern lifestyle, the series now includes Rural House Rent, Online Streaming Services, Babysitters, Exercise Equipment, Pen-drives, and Value-added Dairy Products.
- Exclusions: Obsolete items like VCR/VCD players, Radios, Tape recorders, and CDs/DVDs have been removed.
4. Significant Weightage Revisions
The most critical change for economic policy is the redistribution of weights:
| Category | Old Weight (2012 Base) | New Weight (2024 Base) |
| Food and Beverages | ~45.86% | ~36.75% |
| Housing & Utilities | ~10.07% | ~17.67% |
| Transport & Comm. | ~8.59% | ~12.41% |
Note: The sharp reduction in food weight is expected to reduce the volatility of headline inflation, as food prices are highly seasonal and prone to supply shocks.
Q1. With reference to the recently introduced New Consumer Price Index (CPI) series (Base 2024), consider the following statements:
1. The weightage of ‘Food and Beverages’ in the combined CPI basket has been increased to reflect rising food inflation.
2. The new series adopts the COICOP 2018 framework, increasing the number of classification divisions from six to twelve.
3. For the first time, the index includes a component for rural house rent.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Correct Answer: (b)
Explanation
• STATEMENT 1 IS INCORRECT: The weightage of ‘Food and Beverages’ has actually decreased from approximately 45.86% to 36.75% because, as per the HCES 2023-24, Indians are spending a smaller proportion of their income on food compared to 2012.
• STATEMENT 2 IS CORRECT: The new series aligns with the UN's COICOP 2018 (Classification of Individual Consumption According to Purpose), expanding the structure to 12 divisions for better granularity and global standards.
• STATEMENT 3 IS CORRECT: The 2024 series has introduced rural house rent to fill the data gap and reflect the changing consumption patterns in rural India.
