Expert Group Report on Comprehensive Updation of CPI

The Ministry of Statistics and Programme Implementation has released the Report of the Expert Group on Comprehensive Updation of the Consumer Price Index (CPI).

• The revised CPI series will be known as CPI 2024.

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Key Highlights of the Expert Group Report on CPI Updation

• Revision of Base Year and Reference Period:
  • The base year of CPI has been revised to 2024 = 100 to reflect recent consumption patterns.
  • Weight reference period is fixed as Household Consumption Expenditure Survey (HCES) 2023–24, ensuring contemporary relevance.
  • Where 2023–24 data is unavailable, HCES 2022–23 data is to be used.
• Expansion in Market and Item Coverage:
  • Market Coverage: The number of rural markets has increased from 1181 to 1465, while urban markets have increased from 1114 to 1395, covering 434 towns compared to 310 towns earlier. 
  • Item Coverage: The total number of weighted items has increased from 299 to 358, with a notable increase in both goods (308) and services (50).
    • Earlier CPI 2012: 299 items (Goods 259, Services 40)
• Adoption of International Classification
  • The CPI framework will adopt Classification of Individual Consumption According to Purpose (COICOP) 2018, the latest UN-endorsed classification.
  • This enhances international comparability, transparency, and credibility of India’s inflation data.
• Conduct of Fresh Market Survey: A de novo market survey is recommended for: 
  • Verification of rural and urban samples
  • Identification of representative markets and shops
  • Mapping of items and specifications.
• Introduction of Online Markets
  • Inclusion of 12 online markets in cities with population above 25 lakh.
  • Weekly price collection from e-commerce platforms to capture digital consumption trends.
• Index Compilation Methodology:
  • The CPI 2024 series introduces important methodological refinements. 
  • At the elementary level, Jevons’ short (chain-base) index formula has replaced the long index method, reducing dependence on base prices and improving stability. 
  • At higher aggregation levels, indices are compiled using the Modified Laspeyres (Young) Index, which combines fixed expenditure weights with updated price data
• Reforms in Housing Index
  • For the first time, the house rent index has been extended to rural areas
  • Employer-provided accommodation to be excluded to avoid distortion.
  • Census 2011 to be used for dwelling-type weights
• Measurement of Electricity Prices: Electricity prices to be captured using four standard consumption slabs (100, 200, 300, and 400 units)
• Treatment of Free Social Transfers: Free items distributed under schemes like PMGKAY and PDS not be included in CPI.
  • This is to ensure that CPI should reflect prices actually paid by households, not welfare transfers
• Enhanced Data Dissemination: 
  • The CPI 2024 series significantly improves data dissemination by releasing item-level indices for rural, urban, and combined sectors, as well as for all States and Union Territories.
  • Data will be available across all COICOP levels- division, group, class, sub-class, and item

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