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India's Housing Index Overhaul: How New CPI Changes Affect Inflation

The government has released a discussion paper proposing significant changes to how housing costs are measured in the Consumer Price Index. Housing represents a major component of household spending, accounting for over 21% of urban expenditure. These methodological revisions aim to better capture actual housing cost movements each month. Stakeholders have until November 20 to provide feedback on the proposed changes.

Key Points: Government Proposes Housing Index Changes in New CPI Series

  • Housing constitutes 21.67% expenditure share in urban CPI basket
  • Ministry seeks stakeholder feedback on methodology changes by November 20
  • Proposed changes incorporate global best practices and expert recommendations
  • Current CPI inflation hit 8-year low of 1.54% in September
  • Food inflation remains negative for fourth consecutive month
  • Housing index crucial for policy decisions and household financial planning
2 min read

Govt releases paper on proposed changes in housing index compilation in new CPI series

Ministry of Statistics releases discussion paper on housing index methodology revisions in CPI series, seeking stakeholder feedback by November 20.

"Robust and relevant housing index compilation methodology for capturing its actual movement every month is of utmost importance - Ministry of Statistics"

New Delhi, Oct 30

The government on Thursday released a discussion paper on proposed changes in the housing index compilation methodology in the new Consumer Price Index (CPI) series.

The Ministry of Statistics and Programme Implementation (MoSPI) is undertaking the base revision exercise of the CPI. The discussion paper is available on the MoSPI website and comments and suggestions may be sent by November 20.

As part of CPI, Housing constitutes a major component with an expenditure share of 21.67 per cent in urban areas and 10.07 per cent at the All-India level in the current series.

According to the ministry, housing is a crucial indicator for the overall well-being of the households not only in India but across the world as a significant amount of their income is spent either on house rent or maintaining an owned house.

"Inflation based on house rent index is an important tool not only for the policy and decision makers but also for the households. Therefore, robust and relevant housing index compilation methodology for capturing its actual movement every month is of utmost importance," the ministry said in a statement.

Based on the feedback received from various stakeholders, experts and global best practices, MoSPI is proposing changes in the existing housing index compilation methodology.

The paper on the proposed changes in housing index compilation methodology provides detailed outlines of the existing methodology and proposed changes for the new series.

The ministry invites views and comments from experts, academicians, Central government Ministries/ departments, State governments, financial institutions and other stakeholders on the proposed housing index compilation methodology.

India's inflation rate based on the Consumer Price Index (CPI) declined to an over 8-year low of 1.54 per cent in September this year, compared to the same month of the previous year, as prices of food items and fuels turned cheaper during the month, according to latest figures released by the Ministry of Statistics.

This is the lowest year-on-year inflation after June 2017, and is also lower than the inflation rate of 2.05 per cent for August. Food inflation continued in the negative zone for the fourth consecutive month and was recorded at -2.28 per cent during September, the figures showed.

- IANS

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Reader Comments

R
Rohit P
As someone working in real estate analytics, I appreciate MoSPI seeking stakeholder feedback. The 21.67% weightage for urban housing seems appropriate given how much of our income goes toward rent/EMIs.
S
Sarah B
While I support updating methodology, I hope they consider regional variations properly. Housing costs in tier-2 cities are very different from metros. One-size-fits-all approach won't work for India.
A
Arjun K
Good initiative! Accurate housing inflation data is crucial for RBI's monetary policy decisions. This affects interest rates on our home loans. Hope they implement the changes soon.
M
Meera T
The timing is interesting given current low inflation numbers. Are they preparing for when housing costs start rising again? Smart move by the government to be proactive.
D
David E
I hope they include maintenance costs properly. In Indian cities, society maintenance charges have become a significant monthly expense that many indexes miss.

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