In order to track housing inflation better in the Consumer Price Index (CPI), the government is planning to give higher prominence to changes in housing rents. This is part of its overall plan to change the way housing inflation is tracked by its statistics department.
In a consultation paper released on Thursday, the Ministry of Statistics and Programme Implementation has proposed to increase the frequency and coverage of rent data collection.
Rent data will be collected monthly, replacing the current practice of doing so every six months. As per the proposal, instead of limiting rent collection to one-sixth of the sample, rent data would be collected from all selected dwellings each month.
Currently, only house rent in urban areas is tracked, but the government now proposes to also track rent in rural areas.
“In addition to urban expenditure on housing, the Housing Consumption Expenditure Survey 2023-24 has also captured house rent data for rural areas, including imputed rent for owner-occupied dwellings. Consequently, the new series will compile the Housing Index for both rural and urban sectors. This marks a departure from the current series,” says the consultation paper.
As per the proposal, rent data will be collected from 12 houses per urban market, and six houses from rural dwellings, based on availability.
The inflation data will exclude employer-provided dwellings to eliminate distortions due to concessional rent in such houses.
Houses for collection of rent data will be categorized by the number of living rooms -- Category 1: dwellings with 1 living room; Category 2: dwellings with 2 living rooms; Category 3: dwellings with 3 living rooms and Category 4: dwellings with 4 or more living rooms.
As a part of the Consumer Price Index (CPI), housing constitutes a major component with an expenditure share of 21.67% in urban areas and 10.07% at the all-India level in the current series.
It may be noted that the base year for CPI will be changed by early next year. Along with this, the new CPI series would also be based on a different basket of goods and services with changed weightage.
