Consumer Price Index (CPI): India’s Retail Inflation 5.69% in December 2023

Context:

India’s Consumer Price Index (CPI) based inflation rate touched 5.69% in December.

Headline Inflation Rate: December data shows that the Year on Year (YoY) inflation rate has started rising towards the end of 2023.

Consumer Price Index

- Reason: The relative spike in food prices in 4 food groups accounted for 23% of the total index weight relative to December 2022.
  - Vegetable prices increased by almost 28%
  - Pulses were costlier by 21%
  - spices by 20%.
  - Cereals, too, were costlier by 10%.
- Regional variation: Odisha is registering the highest inflation at 8.7% and Delhi is experiencing the lowest at 2.9%
Core Inflation Rate: It is the inflation rate after removing the food and fuel inflation that is showing a decreasing trend.
FY 2023-2024: Inflation for the full financial year will likely remain at 5.5%.

About: Consumer Price Index (CPI) measures changes over time in the general level of prices of a basket of selected goods and services that households acquire for the purpose of consumption.
Prepared by: National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI)
Consumer Price Index (CPI) basket: It comprises 299 items.
Types:
- CPI for Industrial Workers (CPI-IW): Compiled by NSO
- CPI for Urban Non-Manual Employees (CPI-UNME): Compiled by NSO
- CPI for Agricultural Labourers (CPI-AL): It is used to calculate minimum wages in the agricultural sector across different states and compiled by NSO
- CPI for Rural Laborers (CPI-RL): Compiled by the Labor Bureau, it reflects price movements specifically for rural laborers.
Base year: It is 2012 for the current series of indices.
Method: The monthly price data is collected from 1181 villages and 1114 urban markets spread all across the country. The data for this purpose is collected on a weekly basis by the field staff of NSO.
Components: Consumer Price Index has 6 main components with differing weights
- Food and beverages (45% weight overall with Cereals accounting for 9.67% of the total)
- Pan, tobacco, and intoxicants (2.38%)
- Clothing and footwear(6.53%)
- Housing (10.07%)
- Fuel and light (6.84%)
- Miscellaneous (services such as education, health care etc.) (28.32%)