India will reduce the weight of food and beverages in its new Consumer Price Index (CPI) series to 36.75% from the current 45.86%. The revision reflects changing consumption patterns, with greater emphasis on housing, transport, and services. The move aims to provide a more accurate measure of inflation trends.
The Ministry of Statistics and Programme Implementation announced a significant revision to India’s CPI basket, reducing the weight of food and beverages. This adjustment acknowledges the shift in household spending toward non-food categories, aligning inflation measurement more closely with modern consumption habits.
Key Highlights:
-
Food & Beverages Weight: Cut to 36.75% from 45.86% in the new CPI series.
-
Reason for Change: Reflects declining share of food in household expenditure and rising demand for housing, transport, and services.
-
Impact on Inflation: CPI will better capture price movements in non-food sectors, reducing volatility caused by food price swings.
-
Policy Significance: Provides policymakers with a more balanced inflation measure for monetary and fiscal decisions.
-
Global Alignment: Brings India’s CPI methodology closer to international standards, where food typically carries lower weight.
This revision marks a structural shift in India’s inflation measurement, highlighting the country’s transition toward a more diversified consumption economy. It is expected to improve policy accuracy and investor confidence in India’s economic data.
Sources: Reuters, Economic Times, Business Standard, Mint