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New CPI Series to Sharpen Poverty Estimates, Policy Responses: CEA

India has launched a new Consumer Price Index series with 2024 as the base year to better reflect contemporary household spending patterns. Chief Economic Advisor V. Anantha Nageswaran stated the updated data will make poverty estimates more accurate and reveal income growth through increased service consumption. The revised index expands the item basket to 358 and reclassifies groups to align with international standards, aiming to reduce volatility in headline inflation. This change is expected to lead to more focused monetary policy and greater predictability in government fiscal expenditures like Dearness Allowance.

Key Points: New CPI Series with 2024 Base Year Launched for Accurate Data

  • New CPI has 2024 base year
  • Shows shift from food to services spending
  • Aims for more stable, predictable inflation data
  • Aligns with international standards with 12 divisions
2 min read

New CPI series to make poverty estimates, policy responses more accurate: CEA Nageswaran

India's new CPI series reflects shifting household spending, improves poverty estimates, and aids fiscal & monetary policy, says CEA Nageswaran.

New CPI series to make poverty estimates, policy responses more accurate: CEA Nageswaran
"The monetary policy response... could become more focused on aggregate demand pressures - V. Anantha Nageswaran"

New Delhi, Feb 13

As India launched the Consumer Price Index series with 2024 as the base year, Chief Economic Advisor V. Anantha Nageswaran has said the change better reflects household spending patterns, makes poverty estimates more accurate, adding that the new findings reveal income growth and productivity gains.

The new CPI series found rising service consumption, as the share of food in domestic budgets declined and more accurate data will help fiscal and monetary policy makers formulate better responses to evolving economic conditions, Nageswaran said.

CEA said the new series captures the transition in domestic budgets of food's share moving to services such as health, education, mobility and connectivity is typically associated with income growth and productivity gains.

All-India CPI inflation rate in January stood at 2.75 per cent (year-on-year), with rural price rise at 2.73 per cent and urban inflation at 2.77 per cent. Food inflation, in negative territory till December 2025 under the old series, stood at 2.1 per cent in the new series.

"The monetary policy response in particular could become more focused on aggregate demand pressures rather than dealing with supply-induced inflation and dealing with it through a demand-sensitive variable like the interest rate," he said.

Lower weightage for the otherwise volatile group of food and beverages may make the headline inflation less volatile, he noted.

"If CPI volatility declines, it means that fiscal expenditure volatility such as Dearness Allowance (DA) fixation, inflation-indexed bonds, linked to CPI could also become more stable, predictable and reliable, and this could give better budget predictability and visibility as well to fiscal numbers." he further pointed out.

The Ministry of Statistics and Programme Implementation (MoSPI) on Thursday released the first print of the revamped Consumer Price Index (CPI) series with base year 2024.

The earlier six-group classification was replaced with 12 divisions to align with international standards and uses the 'HCES 2023-24' for updating the household consumption basket.

The new basket expanded to 358 items from 299, with goods rising to 308 and services to 50, underscoring the growing role of services in household consumption.

Saurabh Garg, Secretary, Ministry of Statistics and Programme Implementation, said the government plans to do base revisions of CPI every five years, with the next household consumer expenditure survey scheduled for 2027‑28.

- IANS

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Reader Comments

P
Priya S
Finally! The weightage for food needed to come down. My family budget for groceries is not what it was 10 years ago. Now a huge chunk goes to my child's tuition and our mobile/data plans. Hope this leads to more stable DA revisions for government employees.
R
Rohit P
Interesting to see food inflation turn positive in the new series. It was showing negative, which felt completely disconnected from the ground reality. Vegetables and pulses have been so expensive! This update seems more honest.
S
Sarah B
As an economist following India, aligning with international standards is crucial for comparative analysis. The expansion to 358 items, especially adding 50 services, is a significant modernization. It should improve the RBI's monetary policy targeting.
V
Vikram M
Good move, but the proof will be in the implementation. My respectful criticism is that data collection must be robust and widespread, especially in rural areas. We need to ensure the "household consumption basket" truly represents all of India, not just urban middle class.
K
Kavya N
The focus on services like health and education is spot on. These costs are skyrocketing and are a major worry for families like mine. If this data helps the government design better schemes or control these costs, it will be a huge relief.

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