SCHOLARS' CORNER

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 CBS LINE

Volume 4(4)

REBASING THE REALITY: A DIVE INTO THE REVISED CPI SERIES

Ms. Annie Joseph
Research Scholar
Centre for Budget Studies, CUSAT

Inflation, the sustained rise in the general price level, is tracked in India through the Consumer Price Index (CPI), which the Ministry of Statistics and Programme Implementation (MoSPI) releases on the 12th of every month. For the public and policymakers alike, it is a vital metric for economic planning. A significant milestone occurred in 2026 with the revision of the CPI base year to 2024=100, replacing the long-standing 2012=100 series. This update was facilitated by the Household Consumption Expenditure Survey (HCES) conducted by the National Sample Survey Office (NSSO) during 2022–23. While a survey was attempted in 2017–18, its results were not released due to data quality concerns, leaving the 2011–12 (68th round) as the previous benchmark. By utilizing the 2022–23 HCES data and the report released in 2024, the CPI basket's weights have been recalibrated to reflect contemporary consumption shifts, such as the declining share of food expenditure and the rise in discretionary spending. Understanding the standard operating procedure for this rebasing offers critical insights into the evolving dynamics of inflation measurement in the Indian economy. 

Previously, the prices of the goods and services in the CPI basket were collected offline with field investigators going around urban and rural markets to capture the prices. The new series has utilized technology to augment manual data collection. CPI 2024 series covers 1,465 rural markets and 1,395 urban markets across 434 towns. Major changes in CPI 2024 includes revising item baskets and weights as per HCES 2023-24, adoption of COICOP - 2018 Framework, refinement in Index compilation methodology, inclusion of alternative data sources, use of modern technology and more granular data dissemination. Twelve online markets have been added across 12 towns with a population of more than 25 lakh to capture price variations of items sold on e-commerce and online platforms. In addition, price collection for airfare, telephone and OTT are also collected through online platforms. At All-India level, the total weighted items have been increased from 299 to 358. Specifically, goods items have risen from 259 to 308, and services items from 40 to 50.  Field Operations Division of National Sample Survey (NSS), MoSPI, collects monthly price data for CPI and online prices are collected on a weekly basis. In the CPI 2024 series, prices are collected using a tablet-based software application via Computer Assisted Personal Interview (CAPI), replacing the traditional paper-based method. India has followed the Classification of Individual Consumption According to Purpose (COICOP) which is the international classification of household expenditure developed by the United Nations Statistics Division. The objective of the COICOP is to provide a framework of homogeneous categories of goods and services from the point of view of its usage by the households. Its adoption ensures that India’s CPI is comparable with CPIs worldwide. CPI 2024 has 12 Divisions, 43 Groups, 92 Classes, and 162 Sub-classes as per COICOP 2018. The Jevons index (Short index formula) is used for compiling elementary indices in the CPI 2024 series. The Modified Laspeyres’ index is used for compiling higher level indices in the CPI 2024 series.  CPI should include only items on which households actually spend money. IMF’s manual on CPI also suggests that social transfer in kind should not be considered in CPI compilation. In view of this, free social transfers are excluded from CPI. In the CPI 2024 series, alternative data sources such as administrative data and e-commerce/online price data are used. Prices for services like Amazon Prime Video, Netflix, Jio Hotstar, SonyLiv, YouTube Premium, and Zee5 are collected online directly from the service providers’ websites. Airfares are collected through well-known online platforms.

A new CPI series with a shifted base (from 2012=100 to 2024=100) creates a mathematical break in the data. Because the two series use different baskets, different weights, and different starting points, they are not naturally comparable. The Linking Factor is the bridge used to maintain a long-term historical perspective. It is calculated to connect the two series over a common overlapping period. The overlapping period here is 2025, during which both CPI 2012 and CPI 2024 indices are available. This overlapping year forms the basis for linking the two series. The Ministry plans to institutionalize base revisions at regular intervals. As per global practices, it should be done every three to five years, depending on the availability of Household Consumption Expenditure Survey (HCES) data.

The transition to the CPI 2024=100 series is a major update that makes India’s inflation tracking more accurate and modern. By using digital tablets for data collection and including online prices from e-commerce and streaming services, the government can now better track how we actually spend money today. The new index shifts focus away from just basic food items to include more services and modern needs, reflecting a new India. This updated economic thermometer helps policymakers make better decisions to keep the economy stable and responsive to real-world changes.

Comparison of division-wise weights of 2012=100 and 2024=100

2012=100

2014=100

Divisions (2012=100)

Combined weight

Divisions (2024=100)

Combined weight

Food and Beverages

45.863

Food and beverages

36.753

Pan, Tobacco intoxicants

2.380

Paan, tobacco and intoxicants

2.989

Clothing and footwear

6.527

Clothing and footwear

6.383

Housing

10.070

Housing, water, electricity, gas and other fuels

17.665

Fuel and Light

6.843

Furnishings, household equipment and routine household maintenance

4.469

Miscellaneous

28.317

Health

6.100

 

 

Transport

8.796

Information and communication

3.609

Recreation, sport and culture

1.516

Education Services

3.333

Restaurants and accommodation services

3.348

Personal care, social protection and miscellaneous goods and services

5.038

 Reference

Press Information Bureau. (2026, February 12). First press release of Consumer Price Index on base 2024=100. Ministry of Statistics & Programme Implementation.

https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2227012&reg=3&lang=2 


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