India’s New CPI Series-2024

Why in News ? Recently  the Ministry of Statistics and Programme Implementation (MoSPI) launched a revamped Consumer Price Index (CPI) series. This marks a significant shift in how India measures inflation, replacing the outdated 2012 framework with a modern system that reflects how Indians live and spend today.

The Big Picture: Why a New Series?

The previous index was based on 2011–2012 spending habits—a time before the explosion of high-speed internet, online shopping, and OTT platforms.

• Base Year: Updated from 2012 to 2024.
• Data Source: Derived from the Household Consumption Expenditure Survey (HCES) 2023–24.
• Philosophy: Aligned with Engel’s Law, which notes that as a nation gets richer, people spend a smaller percentage of their income on food and more on services and lifestyle.

2. Key Structural Changes:

The “New CPI” is more granular and follows international standards (COICOP 2018).

Feature	Old Series (2012)	New Series (2024)
Broad Categories	6 Groups	12 Divisions
Item Count	299 Items	358 Items
Market Coverage	2,295 Markets	2,860 Markets
New Categories	Limited	OTT, Online Markets, Rural Rent

What’s In and What’s Out?

• Added: Rural house rent (first time ever), streaming services (Netflix/Hotstar), gym equipment, baby sitters, pen drives, and value-added dairy.
• Removed: VCR/DVD players, tape recorders, radios, and second-hand clothing (now considered obsolete).
• Digital Inclusion: For the first time, prices are tracked from 12 major online marketplaces.

3. Revised Weightage: From “Roti” to “OTT”

The most critical change for the economy is how much “weight” each category carries in the final inflation number.

• Food & Beverages: Decreased significantly from 45.86% to 36.75%.
  • Implication: Headline inflation will now be less volatile because food prices (which swing wildly) have less impact.
• Housing & Utilities: Increased from 10.07% to 17.67%. This now includes electricity, water, and gas (CNG/PNG).
• Transport & Communication: Increased to 8.8%, reflecting the rising cost and usage of vehicles and data.

4. Latest Inflation Data (January 2026)

The first reading under this new series shows a cooling trend compared to historical averages:

• Headline CPI: 2.75% (Combined)
• Rural Inflation: 2.73%
• Urban Inflation: 2.77%
• Consumer Food Price Index (CFPI): 2.13%

Note: Direct comparison with December 2025 (which was 1.33% under the old base) is difficult because the “basket” has changed. MoSPI has provided a Linking Factor (approx. 0.52) to help economists compare the two.

5. Significance for Policy:

• RBI Monetary Policy: The RBI’s target remains 4% (± 2%). With the new weightage, the “Core Inflation” (which excludes food and fuel) will give the RBI a much clearer signal for changing interest rates.
• Welfare & Wages: This data will be used to recalibrate Dearness Allowance (DA) for government employees and adjust social transfer schemes to match current costs.