NEW DELHI: The basket for Consumer Price Index (CPI), which measures retail inflation, is set for a new-age makeover to reflect the current consumption trends and consumer behaviours. Digital consumption will assume significance in the new CPI basket. Online media and streaming services (OTT platforms) will now be tracked, while prices of telephone services—both landline and mobile—will increasingly draw on online and e-commerce data. In line with rising air travel, international air travel has been added within the airfare index.
The energy basket has also been updated to reflect newer fuels used by households. Compressed natural gas (CNG) and piped natural gas (PNG) have been included alongside traditional fuels, capturing the transition in urban transport and cooking energy choices. For the first time, rural house rent will be included, making the housing index more representative. Coverage of house rent has also been expanded in urban areas, with a larger sample size and the exclusion of employer-provided accommodation to avoid distortions from extreme values.
The CPI basket is set for a overhaul with the launch of the CPI 2024 series in February, marking one of the most comprehensive updates to the inflation basket in over a decade. The base year for the CPI series will be 2023-24.
Saurabh Garg, secretary, Ministry of Statistics and Programme implementation, told TNIE that the new CPI basket—based on Household Consumption Expenditure Survey 2023–24—will see significant expansion in the number of items tracked.
“At all-India level, the number of weighted items will increase from 299 in the 2012 series to 358 in 2024 series. Of these, goods will rise from 259 to 308 items, while services will expand from 40 to 50, underscoring the growing role of services in household expenditure,” he said.
According to Garg, a key structural change in CPI 2024 is the adoption of the UN-recommended Classification of Individual Consumption According to Purpose (COICOP) 2018. This global framework groups consumption items by the purpose they serve, improving international comparability of India’s inflation data and aligning it with best practices followed by advanced statistical systems.
Some items have been regrouped or split to better fit this classification, allowing for more granular analysis of price movements across categories.
The revised CPI will draw prices from a wider geographical base. The number of rural and urban markets has been increased by around 25% compared to the 2012 series, improving coverage and reducing volatility caused by limited sampling.
For items whose prices are administered centrally—such as rail fares, petrol, diesel, LPG, CNG, PNG and postal charges—price indices will now be compiled centrally using administrative data from the relevant ministries. This move is expected to reduce errors associated with decentralised price collection and ensure quicker reflection of official price changes.
Online price data will also play a bigger role. Prices from e-commerce platforms will be collected for 12 cities with populations above 25 lakh by creating additional “online markets,” reflecting the growing share of digital purchases in urban consumption.
While the basket and weights are changing, MoSPI will not publish official core and non-core inflation measures, in line with global practice. Instead, more granular item-level data and weights will be released, allowing users—including the Reserve Bank of India—to compute core inflation based on their own definitions.
Garg says the revamped CPI basket is designed to be more contemporary, transparent and robust, while maintaining continuity with past series.