India Revises CPI Base to 2024, Food Spending Share Declines

Speaking to reporters on the sidelines of a press conference to release the CPI with base year 2024, Garg said the revision incorporates findings from the Consumer Expenditure Survey (CES) 2023-24 and captures changes in household spending patterns over the past decade.

"The consumer price index with the 2024 base has been released. We have revised the base from 2012," Garg said. "It is very important because the consumption patterns of people have changed, the number of data sources that are available have improved and international methodologies have also changed."

He said inflation, which reflects the prices faced by households, must remain representative. "Since inflation gives a picture of the prices faced by households, it is important that it remains representative," Garg said.

"This change in base and use of new data sources will help to ensure that the inflation numbers that are now presented continue to remain representative, as well as use the latest data sources that are available."

According to the CES 2023-24, the proportion of expenditure that households spend on food has declined. "The consumer expenditure survey that we did in 2023-24 showed that the proportion of expenditure that households are spending on food has reduced," Garg said.

He said this trend is consistent with international experience. "Internationally also it is seen that as incomes rise, the proportion of expenditure on food reduces and on other services increases, which is also seen, for example, transport and conveyance has increased and some of the other recreation or services have increased," he said.

Garg added that total expenditure by households in the lowest decile has increased over the past decade. "The total expenditure that any household in the lowest decile has been spending has nearly doubled. In fact, more than doubled over the past 10 years," he said.

Inflation measured by the CPI is a key macroeconomic indicator and is used by the Reserve Bank of India (RBI) for monetary policy decisions. "Inflation is a very important macroeconomic index on which a number of decisions are based, including, for example, the RBI Monetary Policy Committee uses inflation as a major indicator for determination of interest rates," Garg said.

He added that inflation data also helps indicate whether there are supply-side issues in certain commodities.On month-to-month price movements in specific items such as potatoes, onions and pulses, Garg declined to comment. "In every month, there is an increase or decrease in the number of items. Our focus is to provide the data that clearly shows how the consumers and households consume that item. I don't want to comment on that," he said.

Garg said the revised index also reflects changes in technology and data collection over the past decade. "Over the past 10 years, technology has changed, digitalisation has happened, the number of data sources have improved," he said. "Our attempt is always to use the latest available technologies so that decision-making improves."

- ANI