The new series of Consumer Price Index (CPI), used for measuring retail inflation, is going live from February 2026. The Ministry of Statistics and Programme Implementation (MoSPI) has announced changes to the composition of the inflation basket, sharply reducing the weight of food and beverages—from 54% to 37%—often blamed for volatility in headline inflation. The New Indian Express spoke to Dr Saurabh Garg, Secretary, MoSPI, about the upcoming changes to CPI and GDP measurement. Excerpts:
The new base years for inflation and GDP come into force in February. What preparations are underway?
MoSPI is undertaking extensive preparatory work to ensure a smooth rollout of the revised CPI series. The exercise is being guided by an Expert Group examining all methodological and operational aspects. Three discussion papers—on the treatment of PDS items and housing index methodology—were released for public feedback, and the suggestions received have been incorporated.
Field staff and supervisors have been trained on the revised basket and procedures. Trial runs and consistency checks are underway to ensure data accuracy. The e-Sankhyiki portal is being updated to ensure seamless data release on February 12, 2026.
For GDP, an advisory committee with representatives from academia, research institutes, and governments has held around 40 meetings through five sub-committees to finalise methodology and integrate new data sources. Their reports are being prepared. An updated Sources and Methods document will be released in July/August 2026. MoSPI has also conducted pre-release workshops in Mumbai and Delhi, with another scheduled in Chennai, alongside discussion papers to familiarise users with the changes.
Apart from the base years, what major changes will we see in CPI and GDP measurement?
In CPI, based on the HCES 2023–24, the coverage of rural and urban markets has expanded by about 25% since 2012. Methodologies for handling missing prices, house rent, electricity, and elementary indices have been refined. Rural housing is now included, while employer-provided housing is excluded to avoid distortions. Prices of centrally administered items such as rail fares, fuel, LPG, CNG/PNG, and postal charges will be compiled centrally using administrative data. Online data will be used for telecom charges, OTT services, and airfares, and e-commerce prices will be tracked in 12 large cities through dedicated online markets. The CPI will also adopt the UNSD’s COICOP 2018 classification to improve global comparability.
For GDP, with the base year shifting to 2022–23, annual data from the Survey of Unincorporated Enterprises and the PLFS will replace the older benchmark-indicator method for estimating the household sector. Double deflation will be introduced in manufacturing and agriculture with more granular deflators elsewhere. Supply Use Tables will be integrated with the national accounts framework to reduce discrepancies. Greater use will be made of MCA MGT-7 data, along with GST, PFMS, and e-Vahan databases, improving sectoral coverage and reducing reliance on proxies.
How has the inflation basket changed? Will MoSPI publish core inflation?
The CPI basket now includes 358 weighted items, up from 299 earlier. Goods items have increased from 259 to 308 and services from 40 to 50, reflecting changing consumption patterns. New inclusions include rural house rent, OTT services, international air travel, and newer energy sources such as CNG and PNG. Items have also been regrouped to align with COICOP 2018.
MoSPI will not publish core and non-core inflation. Instead, it will release granular item-level data and weights, allowing users, including the RBI, to construct their own measures.
What changes improve measurement of services inflation?
The number of service items has risen to 50 in line with HCES findings. Rural house rent has been included for the first time, and the housing sample size has been expanded in both rural and urban areas. This is expected to provide a more accurate picture of rent inflation faced by households.
Can CPI move to a chain-weighted method like the proposed IIP changes?
A chain-weighted CPI would require annual consumption surveys, which are not planned. However, the new CPI uses the Jevons index, a chain-price method that links monthly price changes. This reduces base-year bias and improves handling of missing prices and item replacement, aligning with IMF best practices.
The IMF has flagged several issues with the way GDP is calculated. How many of those concerns will be addressed with the new series?
The IMF had raised concerns about the continued use of the 2011–12 base year, the reliance on single deflation, the sizeable gap between GDP estimates from the production and expenditure approaches, and the use of proxy indicators to measure the household sector. These concerns are being addressed in the new series. The base year will be updated to 2022–23. Single deflation has been done away with and replaced by double deflation in key sectors and single extrapolation elsewhere. The gap between production and expenditure estimates will be reduced through integration of the National Accounts Framework with the Supply Use Table framework. The measurement of the household sector will also improve with the use of annual survey data instead of proxy indicators.
How is MoSPI ensuring MCA data is reliable for GDP estimation?
Around 85–90% of GVA for companies is derived directly from filed financial returns, with only a small portion estimated indirectly. Shell companies are regularly struck off by the Registrar of Companies. GST data will also be used to validate the base of active companies and remove inactive entities.