NewKerala.com

New CPI Base Year 2024 to Slightly Raise Inflation by 20-30 bps

The Consumer Price Index will adopt a new base year of 2024, with the first data series releasing on February 12. According to an SBI Research report, the updated index will lead to a marginal overall increase of 20-30 basis points in measured inflation. However, during months of high food inflation, the new CPI will actually be 20-30 basis points lower. The revised methodology expands the item basket, incorporates e-commerce and online service prices, and aims to align with global best practices for greater accuracy and comparability.

Key Points: New CPI Base 2024 to Increase Inflation Marginally: Report

  • New CPI base year 2024
  • 20-30 bps marginal increase
  • Lower during high food inflation
  • Data release from Feb 12
  • Incorporates e-commerce prices
3 min read

CPI to increase marginally by 20-30 bps with new base year: Report

SBI Research report states new CPI series with 2024 base year will raise inflation by 20-30 bps, with lower readings during high food inflation months.

"overall CPI will increase marginally by 20-30 bps - SBI Research report"

New Delhi, Jan 30

The Consumer Price Index, with the new base year 2024, will increase marginally by 20-30 bps and in the months when food inflation is higher, the new CPI will be low by 20-30 bps, according to an SBI Research report.

The government had formed an expert group to measure CPI accurately, with the changing consumption behaviour of the households and to incorporate latest global best practices including methodological developments.

The first CPI series based on new base year 2024, will release on February 12, with indices data from January 2025 onwards and inflation data for January 2026. The All-India level back series for the Rural, Urban, and Combined sectors, from January 2013 onwards, will also be released on February 12.

"By considering the new weights on unchanged index we have calculated new CPI with old indices and found that overall CPI will increase marginally by 20-30 bps. While, in the months when food inflation is higher, the new CPI will be low by 20-30 bps," said the report.

The price data will be collected from 1,465 rural markets and 1,395 urban markets across 434 towns. Total number of weighted items in this basket will be 358. Among these items, goods will increase from 259 to 314 and services from 40 to 50 items.

To enhance credibility and to ensure global comparability of Indian CPI, the latest structure of Classification of Individual Consumption According to Purpose (COICOP) 2018 will be adopted in the CPI 2024 series, according to the expert committee recommendations.

"To verify rural and urban samples, identification of markets, shops and mapping of item identification, a de novo market survey will be conducted. The practice of mapping reserve shops in CPI may be dis- continued," according to the report.

To capture price movements on the e-commerce platforms, 12 online markets/towns (having more than 25 lakh population) will be added in CPI 2024 series. The prices of items will be collected through online/e-commerce platforms on weekly basis, it added.

Since prices of rail fare, postal services and fuel (petrol, diesel, LPG, CNG & PNG) are centrally determined, price collection and compilation will be done by PSD. Price collection of telecom services and online media services (OTT) will be done centrally by PSD through the online sources.

Moreover, airfare for the international direct routes are incorporated into the price collection framework in CPI 2024.

In case of gold and silver jewellery, the Group recommended to adopt the approach of defining standard jewellery items that are likely to be available consistently in the market, rather than attempting to price customised pieces. Accordingly, prices of basic and simple gold and silver jewellery such as bangles, necklaces, and rings will be collected.

- IANS

Share this article:

Reader Comments

P
Priya S
A marginal 20-30 bps change sounds technical, but for common people, the real issue is food prices. If the new index shows lower CPI when food inflation is high, will that reduce the pressure on the government to act? We need transparency. 🧐
R
Rohit P
Good move to include e-commerce and standard jewellery items. The old method of pricing custom gold pieces was flawed. My mother always says inflation in gold ornaments is much higher than reported. Hopefully, this captures the true picture.
S
Sarah B
As an expat following Indian economics, this is a positive step towards global comparability (COICOP 2018). Accurate inflation data is crucial for monetary policy and foreign investment decisions. The expanded item basket from 299 to 364 is significant.
V
Vikram M
I have a respectful criticism. While the methodology seems improved, the real test is data collection from 1,465 rural markets. Ground-level execution is often weak. Will the "de novo market survey" actually happen properly, or will it be another paper exercise?
K
Kavya N
Including airfare for international routes is very relevant now! So many families have members working abroad in the Gulf or elsewhere. The cost of visiting home is a major expense. This update reflects how India's consumption has truly globalised. ✈️

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50